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Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc.,...

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Accounting

Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc., produces the cars in batches. To manufacture a batch of the cars, Munoz, Inc., must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2015:
Actual Static-budget
Amounts Amounts
Units produced and sold 15,00011,250
Batch size (number of units per batch)250225
Setup-hours per batch 55.25
Variable overhead cost per setup-hour $40 $38
Total fixed setup overhead costs $12,000 $9,975
Calculate the production-volume variance for fixed overhead setup costs.
Question 10 options:
$400 unfavorable
$3,325 unfavorable
$3,325 favorable
$400 favorable
none of the above.

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