At Overland Company, Maintenance Cost Is Exclusively a Variable Cost

Multiple Choice

At Overland Company, maintenance cost is exclusively a variable cost that varies directly with machine-hours. The performance report for July showed that actual maintenance costs totaled $9,800 and that the associated rate variance was $200 unfavorable. If 8,000 machine-hours were actually worked during July, the budgeted maintenance cost per machine-hour was:

A) $1.20
B) $1.25
C) $1.275
D) $1.225