Casey Corporation produces a special line of basketball hoops in batches. To manufacture a batch of the basketball hoops Casey Corporation must setup the machines and moulds. 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 moulds for different styles of basketball hoops.
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 January 2012.
Required:
a. Calculate the efficiency variance for variable setup overhead costs.
b. Calculate the rate variance for variable setup overhead costs.
c. Calculate the flexible-budget variance for variable setup overhead costs.
d. Calculate the rate variance for fixed setup overhead costs.
e. Calculate the production-volume variance for fixed setup overhead costs.

Question

Casey Corporation produces a special line of basketball hoops in batches. To manufacture a batch of the basketball hoops Casey Corporation must setup the machines and moulds. 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 moulds for different styles of basketball hoops.
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 January 2012.
  Required:
a. Calculate the efficiency variance for variable setup overhead costs.
b. Calculate the rate variance for variable setup overhead costs.
c. Calculate the flexible-budget variance for variable setup overhead costs.
d. Calculate the rate variance for fixed setup overhead costs.
e. Calculate the production-volume variance for fixed setup overhead costs.

Quizplus · Accepted Answer

The Answer of Casey Corporation produces a special line of basketball hoops in batches. To manufacture a batch of the basketball hoops Casey Corporation must setup the machines and moulds. 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 moulds for different styles of basketball hoops.
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 January 2012.
  Required:
a. Calculate the efficiency variance for variable setup overhead costs.
b. Calculate the rate variance for variable setup overhead costs.
c. Calculate the flexible-budget variance for variable setup overhead costs.
d. Calculate the rate variance for fixed setup overhead costs.
e. Calculate the production-volume variance for fixed setup overhead costs.

Casey Corporation Produces a Special Line of Basketball Hoops in Batches