Actual costs Budgeted costs = Supplies variance − X $42,749 = $4,531 − X = $47,280 Per unit cost = Total actual costs ÷ Number of units produced Per unit cost = $47,280 ÷ 19,700 = $2.40 37. Ocker Corporation's flexible budget performance report for last month shows that actual indirect materials cost, a variable overhead cost, was $28,420 and that the variance for indirect materials cost was $3,828 unfavorable. During that month, the company worked 11,600 machine-hours. Budgeted activity for the month had been 11,300 machine-hours. The cost formula per machine-hour for indirect materials cost must have been closest to: A) $2.85 B) $2.18 C) $2.78 D) $2.12 Ans: D Solution: Budgeted number of machine-hours: 11,300 Actual number of machine-hours: 11,600 Actual Costs Incurred Budget Cost for Based on Formula 11,600 11,600 (per MH) Variance Variable overhead costs (Indirect materials) Y $28,420 X $3,828 U Actual Budgeted costs = Indirect materials variance − $28,420 X = $3,828 − X = $24,592 Y = Per machine-hour cost = Per machine-hour cost = Actual cost ÷ Machine-hours = Per machine-hour cost = $24,592 ÷ 11,600 = $2.12 38. Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has
Actual costs − Budgeted costs = Supplies variance X − $42,749 = $4,531 X = $47,280 Per unit cost = Total actual costs ÷ Number of units produced Per unit cost = $47,280 ÷ 19,700 = $2.40 37. Ocker Corporation's flexible budget performance report for last month shows that actual indirect materials cost, a variable overhead cost, was $28,420 and that the variance for indirect materials cost was $3,828 unfavorable. During that month, the company worked 11,600 machine-hours. Budgeted activity for the month had been 11,300 machine-hours. The cost formula per machine-hour for indirect materials cost must have been closest to: A) $2.85 B) $2.18 C) $2.78 D) $2.12 Ans: D Solution: Budgeted number of machine-hours: 11,300 Actual number of machine-hours: 11,600 Cost Formula (per MH) Actual Costs Incurred for 11,600 Budget Based on 11,600 Variance Variable overhead costs (Indirect materials) Y $28,420 X $3,828 U Actual − Budgeted costs = Indirect materials variance $28,420 − X = $3,828 X = $24,592 Y = Per machine-hour cost = Per machine-hour cost = Actual cost ÷ Machine-hours = Per machine-hour cost = $24,592 ÷ 11,600 = $2.12 38. Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has