At Eady Corporation,maintenance is a variable overhead cost that is based on machine-hours.The performance report for July showed that actual maintenance costs totaled $8,650 and that the associated rate variance was $250 unfavorable.If 5,000 machine-hours were actually worked during July,the standard maintenance cost per machine-hour was:
A) $1.73 per MH
B) $1.78 per MH
C) $1.68 per MH
D) $1.83 per MH

Question

Quizplus · Accepted Answer

Variable overhead rate variance = (AH × AR) - (AH × SR)
$250 U = $8,650 - (5,000 MHs × SR)
$250 = $8,650 - (5,000 MHs × SR)
5,000 MHs × SR = $8,650 - $250
5,000 MHs × SR = $8,400
SR = $8,400 ÷ 5,000 MHs
SR = $1.68 per MH

At Eady Corporation,maintenance Is a Variable Overhead Cost That Is