Munoz Inc. produces a special line of plastic toy racing cars in batches. To manufacture a batch of the cars Munoz Inc. must setup the machines and molds. 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 molds for different styles of car. 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 2012: Actual Static-budget Amounts Amounts Units produced and sold 15,000 11,250 250 225 Batch size (number of units per batch) Setup hours per batch 5 5.25 $40 $38 Variable overhead cost per setup hour Total fixed setup overhead costs $14,400 $14,000 What is the variable overhead rate variance? O a. $1,200 unfavourable O b. $840 unfavourable O c. $1,560 favourable O d. $1,200 favourable Oe. $1,560 unfavourable