The cost formula for the maintenance department of Rambo Limited is $19,300 per month plus $7.60 per machine hour used by the production department.

Required:

1. Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used.
2. Prepare an appropriate performance report for the maintenance department assuming that 7,090 machine hours would be used in the month of May and that the total actual maintenance cost incurred in May was $68,960.

Prepare an appropriate performance report for the maintenance department assuming that 7,090 machine hours would be used in the month of May and that the total actual maintenance cost incurred in May was $68,960. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).

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Original Budget (6,600 MH)Flexed Budget (7,090 MH)Actual CostVarianceTotal maintenance cost U