A Company Has Fixed Production Overhead Costs Totalling $25,000

question 138

Multiple Choice

A company has fixed production overhead costs totalling $25,000. The normal production level is 2,500 units per year, yielding a standard fixed overhead rate of $10.00 per unit. If the actual production level is 2,000 units, how much would be the amount of fixed overhead per unit and the amount of total fixed overhead included in inventory? Select the letter for the best answer:

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Definitions:

Price Searchers

Firms or individuals that have the flexibility to set their prices because they offer unique products or services and face little to no direct competition.

Entry Barriers

Impediments that make it difficult for new participants to enter a specific industry or business field.

Monopolistic Competition

A term often used by economists to describe markets characterized by a large number of sellers that supply differentiated products to a market with low barriers to entry. Essentially, it is an alternative term for a competitive price-searcher market.

Marginal Revenue

Extra profit generated from the sale of one more unit of a product or service.