Apex Inc. produces a special line of ski bindings in batches. To manufacture a batch...
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Apex Inc. produces a special line of ski bindings in batches. To manufacture a batch of bindings Apex Inc. must setup the machines. 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 for different type of bindings.
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 2020:
Actual Amounts
Static-budget Amounts
Units produced and sold
15,000
11,250
Batch size (number of units per batch)
250
225
Setup hours per batch
5
5.25
Variable overhead cost per setup hour
$40
$38
Total fixed setup overhead costs
$14,400
$14,000
Calculate the rate and efficiency variances for variable setup overhead costs.
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