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Exercise 15-9 (Algo) Flexible budgeting LO 15-3 The cost formula for the maintenance department of...

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Accounting

Exercise 15-9 (Algo) Flexible budgeting LO 15-3

The cost formula for the maintenance department of Rambo Limited is $19,000 per month plus $7.80 per machine hour used by the production department.

Required:

Calculate the maintenance cost that would be budgeted for a month in which 6,700 machine hours are planned to be used.

Prepare an appropriate performance report for the maintenance department assuming that 7,080 machine hours would be used in the month of May and that the total actual maintenance cost incurred in May was $68,940.

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