Last month, Birkner Corporation's actual indirect materials cost, a variable cost, was $30,444 and the spending variance for indirect materials cost was $8,142 favorable.During that month, the company worked 17,700 machine-hours.Budgeted activity for the month had been 18,200 machine-hours.The cost formula per machine-hour for indirect materials cost must have been closest to:

Question

Quizplus · Accepted Answer

X = Indirect materials cost per machine-hour
Spending variance = Actual results - Flexible budget
$8,142 F = $30,444 - (17,700 × X)
-$8,142 = $30,444 - 17,700X
17,700X = $38,586
X = $38,586 ÷ 17,700
X = $2.18

Last Month, Birkner Corporation's Actual Indirect Materials Cost, a Variable