A Company Reports the Following Information for Its First Year

question 138

Multiple Choice

A company reports the following information for its first year of operations:
$\begin{array}{ll}\text { Units produced this year } & 650 \text { units } \\\text { Units sold this year } & 500 \text { units } \\\text { Direct materials } & \$ 750 \text { per unit } \\\text { Direct labor } & \$ 1,000 \text { per unit } \\\text { Variable overhead } & ? \text { in total } \\\text { Fixed overhead } & \$ 308,750 \text { in total }\end{array}$

If the company's cost per unit of finished goods using variable costing is $2,375,what is total variable overhead?

• A) $237,500
• B) $75,000
• C) $312,500
• D) $406,250
• E) $97,500

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Definitions:

Lot-For-Lot

An inventory management strategy where the order quantity is set to match the exact demand for the product, minimizing stock levels.

Lot Sizing

The determination of the optimal quantity of units to produce or order in a single batch, considering factors like demand, production costs, and storage capacity.

Lead Time

The period between the initiation and completion of a process, such as the time from order to delivery.

Lead Times

The amount of time that elapses between the initiation and the completion of a production process or the delivery of a service.