Randt Footwear Corporation's flexible budget cost formula for supplies, a variable cost, is $2.79 per unit of output. The company's performance report for last month showed a $5,363 favorable spending variance for supplies. During that month, 17,300 units were produced. Budgeted activity for the month had been 17,200 units. The actual cost per unit for indirect materials must have been closest to:

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The flexible budget cost for supplies is $2.79 per unit. For 17,300 units, the budgeted cost is 17,300 * $2.79 = $48,267. A $5,363 favorable variance means the actual cost was $48,267 - $5,363 = $42,904. The actual cost per unit is $42,904 / 17,300 = $2.48.

Randt Footwear Corporation's Flexible Budget Cost Formula for Supplies, a Variable