Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc.,produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, 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

Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc.,produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, 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

Calculate the spending variance for variable overhead setup costs

A. $264 unfavorable

B. $264 favorable

C. $150 favorable

D. $150 unfavorable

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Budget Amounts 10,000 400 6 $50 $18,000 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 Actual Amounts 9,000 375 5.5 $52 $17,750 Budget Amounts 10,000 400 6 $50 $18,000 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 Actual Amounts 9,000 375 5.5 $52 $17,750

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