Hamner Corporation's flexible budget performance report for last month shows that actual indirect materials cost,a variable cost,was $45,240 and that the spending variance for indirect materials cost was $3,480 unfavorable.During that month,the company worked 17,400 machine-hours.Budgeted activity for the month had been 17,000 machine-hours.The cost formula per machine-hour for indirect materials cost must have been closest to:
A)$2.46
B)$2.87
C)$2.40
D)$2.80

Question

Quizplus · Accepted Answer

X = Indirect materials cost per machine-hour
Spending variance = Actual results - Flexible budget
$3,480 = $45,240 - (17,400 F1F1F1S1F1F1F10 X)
$3,480 = $45,240 - 17,400X
$41,760 = 17,400X
X = $2.40

Hamner Corporation's Flexible Budget Performance Report for Last Month Shows