Question

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 $10,110 and that the associated rate variance was $310 unfavorable. If 5,600 machine-hours were actually worked during July, the standard maintenance cost per machine-hour was:

Answer 1

"$1.75" is the appropriate approach.

Step-by-step explanation:

The given values are:

Rate variance

= $310 (unfavorable)

Actual maintenance costs

= $10,110

Machine hours

= 5,600

Now,

⇒
`Rate \ variance=(5600* Standard \ maintenance \ cost \ per \ machine \ hour)-(Actual \ maintenance \ cost)`

On substituting the values, we get

⇒
`-310=(5600* Standard \ maintenance \ cost \ per \ machine \ hour)-10110`

⇒
`Standard \ maintenance \ cost \ per \ machine \ hour=(10110-310)/(5600)`

⇒
`=(9,800)/(5600)`

⇒
`=1.75` ($)