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GMD Corporation's Flexible Budget

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GMD Corporation's flexible budget performance report for last month shows that actual indirect materials cost, a variable overhead cost, was $28,194 and that the variance for indirect materials cost was $1,887 unfavorable. During that month, the company worked 11,100 machine-hours. Budgeted activity for the month had been 11,200 machine-hours. The cost formula per machine-hour for indirect materials cost must have been closest to:
A) $2.69
B) $2.71
C) $2.35
D) $2.37

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Solution Summary

The solution explains how to determine the cost formula based on the flexible budget.

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The actual cost is 28,194 and the variance is 1,887 unfavorable
The budgeted ...

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