Reference no: EM132653706

OzPIastic Co. produces a special line of plastic toy racing cars. OzPIastic produces the cars in batches. To manufacture a batch of the cars, OzPIastic must set up the machines and moulds. Set-up costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Set-up Department is responsible for setting up machines and moulds for different styles of car. Set-up overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of set-up-hours. The following information pertains toJune 2018:

                                                                     Actual              Static-budget Amounts

Amounts Units produced and sold              30,000                   22,500

Batch size (number of units per batch)            250                        225

Set-up-hours per batch                                   5                           5.25

Variable overhead cost per set-up-hour            $40                            $38

Total fixed setup overhead costs                     $14,400                      $14,000

Problem 1: Calculate the spending variance for ?xed set-up overhead costs.

Option 1: $3600 unfavourable

Option 2: $400 unfavourable

Option 3: $400 favourable

Option 4: $3200 unfavourable