A Company Reports the Following Information for Its First Year

question 60

Multiple Choice

A company reports the following information for its first year of operations: $\begin{array}{ll}\text { Units produced this year } & 43,000 \text { units } \\\text { Units sold this year } & 39,000 \text { units } \\\text { Direct materials } & \$ 0.57 \text { per unit } \\\text { Direct labor } & \$ 0.83 \text { per unit } \\\text { Variable overhead } & \$ 26,660 \text { in total } \\\text { Fixed overhead } & ? \text { in total }\end{array}$ If the company's cost per unit of finished goods using variable costing is $2.02, what is the amount of total fixed overhead?

• A)$26,660
• B)$35,690
• C)$24,510
• D)Some other amount
• E)Cannot be determined from the given data.

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Definitions:

Variable Overhead Rate

The rate at which variable overhead costs fluctuate with changes in activity level or production volume, expressed per unit of activity.

Fixed Manufacturing Overhead

The consistent, static costs associated with manufacturing a product, such as rent for factory premises or salaries for permanent staff, which do not change with production volume.

Budget Variances

The difference between budgeted or planned financial activity and the actual financial performance, indicating over or underperformance against budget.

Machine-Hours

A measurement of the amount of time machines are operating, used as a basis for allocating machine-related costs to products or services.