Question

Bristol Fabricators, Inc., produces air purifiers in batches. To manufacture a batch of the purifiers, Bristol Fabricators, Inc., must set up the machines and assembly line tooling. 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 tooling for different models of the air purifiers. 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: Budget Amounts 16,200 465 Units produced and sold Batch size (number of units per batch) Setup - hours per batch Variable overhead cost per setup-hour Total fixed setup overhead costs 11 Actual Amounts 15,000 425 6.75 $53.00 $36,333 $48.00 $36,700 Calculate the production - volume variance for fixed overhead setup costs. (Round all intermediary calculations to two decimal places and your final answer to the nearest whole number.) O A. $2,719 favorable O B. $367 favorable OC. $367 unfavorable O D. $2,719 unfavorable

Answer 1

Production volume variance = Actual - Budgeted = (36,700/16,200)*15,000 - 36,700 = 33,981 - 36,700 = 2719 Favourable ​​​​​Option A is the answer