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SCORPION-xisa [38]
2 years ago
3

At Eady Corporation, maintenance is a variable overhead cost that is based on machine-hours. The performance report for July sho

wed that actual maintenance costs totaled $12,550 and that the associated rate variance was $390 unfavorable. If 6,400 machine-hours were actually worked during July, the standard maintenance cost per machine-hour was:
Business
1 answer:
Advocard [28]2 years ago
3 0

Answer:

$1.9 per MH

Explanation:

Since the associated rate variance is unfavorable, that amount must be subtracted from the actual maintenance cost in order to obtain the standard maintenance cost (SMC):

SMC = \$12,550 - \$390\\SMC = \$12,160

During July, 6,400 machine-hours were actually worked, so the standard maintenance cost per machine-hour was:

\frac{\$12,160}{6,400} = \$1.9

The cost was $1.9 per MH

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