Question

Jo Nathan Publishing Company specializes in printing specialty textbooks for a small but profitable college market. Due to the high setup costs for each batch printed, Jo Nathan holds the book requests until demand for a book is approximately 500. At that point Jo Nathan will schedule the setup and production of the book. For rush orders, Jo Nathan will produce smaller batches for an additional charge of $700 per setup.
Budgeted and actual costs for the printing process for 2013 were:
REQUIRED
1. What is the static-budget number of setups for 2013?
2. What is the flexible-budget number of setups for 2013?
3. What is the actual number of setups in 2013?
4. Assuming fixed setup overhead costs are allocated using setup-hours, what is the predetermined fixed setup overhead allocation rate?
5. Does Jo Nathan's charge of $700 cover the budgeted variable overhead cost of an order? The budgeted total overhead cost?
6. For variable setup overhead costs, compute the rate and efficiency variances.
7. For fixed setup overhead costs, compute the rate and the production-volume variances.
8. What qualitative factors should Jo Nathan consider before accepting or rejecting a special order?


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  • CreatedJuly 31, 2015
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