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Randt Footwear Corporation's flexible budget cost formula for supplies, a variable cost, is $2.79
per unit of output. The company's flexible budget performance report for last month showed a
$5,363 favorable spending variance for supplies. During that month, 17,300 units were produced.
Budgeted activity for the month had been 17,200 units. The actual cost per unit for indirect
materials must have been closest to:
$2.48
$2.18
$2.79
$2.17
Solution
Answer is $2.48 as explained below:
Actual budgeted amount 2.79*17200 47988
Actual spend on 17200 units produced 47988-5363 42625
Add favorable variance cost for 100 units 100*2.79 279
Actual variable cost 42904
Units produced 17300
Per unit cost 2.48

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Randt Footwear Corporation-'s flexible budget cost formula for supplie.docx

  • 1. Randt Footwear Corporation's flexible budget cost formula for supplies, a variable cost, is $2.79 per unit of output. The company's flexible budget performance report for last month showed a $5,363 favorable spending variance for supplies. During that month, 17,300 units were produced. Budgeted activity for the month had been 17,200 units. The actual cost per unit for indirect materials must have been closest to: $2.48 $2.18 $2.79 $2.17 Solution Answer is $2.48 as explained below: Actual budgeted amount 2.79*17200 47988 Actual spend on 17200 units produced 47988-5363 42625 Add favorable variance cost for 100 units 100*2.79 279 Actual variable cost 42904 Units produced 17300 Per unit cost 2.48