Royal Industries Has the Following Information About Its Standards and Production

question 82

Multiple Choice

Royal Industries has the following information about its standards and production activity for January: Actual manufacturing overhead cost incurred, $86,500
Variable manufacturing overhead cost @ $2.50 per unit produced
Fixed manufacturing overhead cost @ $2 per unit produced ($24,000/12,000 budgeted units)
Actual units produced, 4,500
Assume the allocation base for fixed overhead costs is the number of units to be produced.
How much are the standard overhead costs allocated to actual production?

• A) $54,000
• B) $30,000
• C) $86,500
• D) $20,250

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Definitions:

Long-run Equilibrium

A state in which all aspects of the market, including supply, demand, and price, are stabilized over time, allowing for full adjustment to any economic changes.

MR = MC

This equation represents the profit-maximizing condition in economics where marginal revenue (MR) equals marginal cost (MC), often used to determine the optimal level of output.

Competitive Price-searcher

A market participant who actively compares prices among competitors to find the best possible deal, often in markets with imperfect competition.

Short-run Losses

Financial losses that a firm experiences within a limited time period, usually due to fixed costs and market conditions.