The cost formula for the maintenance department of Rainbow, Ltd, is $19,400 per

Question

The cost formula for the maintenance department of Rainbow, Ltd, is $19,400 per month plus $7.90 per machine hour used by the production department Required a. Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used b. Prepare an appropriate performance report for the maintenance department assuming that 7,100 machine hours were actually used in the month of May and that the total maintenance cost incurred was $68,980. (Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Original Budget Flexed Budget Actual Cost Variance ?? (7,100 MH Total maintenance cost Hints References eBook &Resources; Hint#1 Check my.work

Explanation / Answer

a Maintenance cost = 19400+(6600*7.90)= $71540 b Original budget Flexed budget Actual cost Variance Total maintenance cost 71540 75490 68980 6510 F

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