Question 1
The production-volume variance is a component of the sales-volume variance.
◦ true
◦ false
Question 2
Casey Corporation produces a special line of basketball hoops. Casey Corporation produces the hoops in batches. To manufacture a batch of the basketball hoops, Casey Corporation 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 basketball hoops.
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 January 2005.
| Basketball hoops produced and sold | 30,000 | 28,000 |
| Batch size (number of units per batch) | 200 | 250 |
| Variable overhead cost per setup hour | $10 | $9 |
| Total fixed setup overhead costs | $22,500 | $21,000 |
Required:
| a. | Calculate the efficiency variance for variable overhead setup costs. |
| b. | Calculate the spending variance for variable overhead setup costs. |
| c. | Calculate the flexible-budget variance for variable overhead setup costs. |
| d. | Calculate the spending variance for fixed overhead setup costs. |
| e. | Calculate the production-volume variance for fixed overhead setup costs. |
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