Question

H873 Corporation's flexible budget cost formula for supplies, a variable cost, is $2.67 per unit of output. The company's flexible budget performance report for last month showed a $9,604 favorable spending variance for supplies. During that month, 19,600 units were produced. Budgeted activity for the month had been 19,200 units. The actual cost per unit for indirect materials must have been closest to

Answer 1

$2.18

Step-by-step explanation:

Actual cost per unit of indirect materials is the actual costs of indirect materials divided by the actual units of indirect materials used in the month.

Actual costs of indirect materials=budgeted cost of indirect materials(based on actual quantity)-favorable spending variance

budgeted costs based on actual quantity=$2.67*19600=$52332

favorable spending variance is $9,604

actual costs of indirect materials =$52332 -$9604=$42728

Actual cost per unit for indirect materials=$42728 /19600=$2.18

The actual cost per unit for indirect materials cost is $2.18