Magenta Inc If the Company's Cost Per Unit of Finished Goods Using

question 150

Multiple Choice

Magenta Inc.reports the following information for the current year which is its first year of operations: $\begin{array}{ll}\text { Units produced this year } & 750,000 \text { units } \\\text { Units sold this year } & 740,000 \text { units } \\\text { Direct materials } & \$ 18.30 \text { per unit } \\\text { Direct labor } & \$ 14.20 \text { per unit } \\\text { Variable overhead } & ? \text { in total } \\\text { Fixed overhead } & \$ 4,500,000 \text { in total }\end{array}$ If the company's cost per unit of finished goods using absorption costing is $39.75, what is total variable overhead?

• A)$925,000
• B)$877,500
• C)$937,500.
• D)$865,800
• E)$5,437,500

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in manufacturing a product or delivering a service.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities related to production.

Overhead Cost Per Unit

The total indirect costs of production allocated to each unit of product.

Standard Units

Units of measure used consistently across an organization to maintain uniformity in reporting, manufacturing, or evaluating efficiencies.