ACC350 Final Part 1 Casey Corporation produces a special line of basketball hoops

ACC350 Final Part 1 - Casey Corporation

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 2004.

Static Budget Amounts Actual Amounts

Basketball hoops produced and sold 30,000 28,000

Batch Size (# of units per batch) 200 250

Setup-hours per Batch 5 4

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 setup overhead costs.

b. Calculate the spending variance for variable setup overhead costs.

c. Calculate the flexible-budget variance for variable setup overhead costs.

d. Calculate the spending variance for fixed setup overhead costs.

e. Calculate the production-volume variance for fixed setup overhead costs.

Show all calculations.

SOLUTION PREVIEW

S.no.	Particulars	Static budget amounts	Actual amounts
a.	Basketball hoops produced and sold	30000	28000
b.	Batch size	200	250
c.	No. of batches (a/b)	150	112

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