5 Demco Berhad produces a single product and used flexible budgetary control system as part of company's planning. The company assigns the manufacturing overhead costs to production on the basis of machine hours. Below is part of the budgeted overhead cost based on machine hours: Capacity 80% 100% Machine hours Maintenance Supplies 40,000 50,000 RM34,000 RM46,000 RM28,000 RM30,000 During April 2020, the company operated at 85% of machine hours and the actual overhead cost for maintenance and supplies are RM38,750 and RM26,375 respectively. The maintenance cost is a semi variable where there is a step up cost of RM5,000 in the fixed cost element for volumes in excess of 40,000 machine hours. The actual fixed costs remains as budgeted. Calculate the variable cost per machine hour for maintenance cost above. A. RMO.20 per machine hour B. RM0.60 per machine hour C. RMO.70 per machine hour D. RM1.20 per machine hour

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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5 Demco Berhad produces a single product and used flexible budgetary control system as
part of company's planning. The company assigns the manufacturing overhead costs to
production on the basis of machine hours. Below is part of the budgeted overhead cost
based on machine hours:
Capacity
80%
100%
Machine hours
Maintenance
Supplies
40,000
50,000
RM34,000 RM46,000
RM28,000 RM30,000
During April 2020, the company operated at 85% of machine hours and the actual
overhead cost for maintenance and supplies are RM38,750 and RM26,375 respectively.
The maintenance cost is a semi variable where there is a step up cost of RM5,000 in the
fixed cost element for volumes in excess of 40,000 machine hours. The actual fixed costs
remains as budgeted.
Calculate the variable cost per machine hour for maintenance cost above.
A. RMO.20 per machine hour
B. RM0.60 per machine hour
C. RMO.70 per machine hour
D. RM1.20 per machine hour
Transcribed Image Text:5 Demco Berhad produces a single product and used flexible budgetary control system as part of company's planning. The company assigns the manufacturing overhead costs to production on the basis of machine hours. Below is part of the budgeted overhead cost based on machine hours: Capacity 80% 100% Machine hours Maintenance Supplies 40,000 50,000 RM34,000 RM46,000 RM28,000 RM30,000 During April 2020, the company operated at 85% of machine hours and the actual overhead cost for maintenance and supplies are RM38,750 and RM26,375 respectively. The maintenance cost is a semi variable where there is a step up cost of RM5,000 in the fixed cost element for volumes in excess of 40,000 machine hours. The actual fixed costs remains as budgeted. Calculate the variable cost per machine hour for maintenance cost above. A. RMO.20 per machine hour B. RM0.60 per machine hour C. RMO.70 per machine hour D. RM1.20 per machine hour
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