Gage Company Reports the Following Information for Its First Year

question 155

Multiple Choice

Gage Company reports the following information for its first year of operations.
$$\begin{array} { l l } \text { Units produced this year } & 7,000 \text { units } \\\text { Units sold this year } & 6,500 \text { units } \\\text { Direct materials } & \$ 22 \text { per unit } \\\text { Direct labor } & \$ 30 \text { per unit } \\\text { Variable overhead } & ? \text { in total } \\\text { Fixed overhead } & \$ 56,000 \text { in total }\end{array}$$
If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?

• A) $21,000
• B) $71,500
• C) $77,000
• D) $19,500
• E) $16,590

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Definitions:

Rate of Inflation

The annual rate at which the overall cost of goods and services rises in an economy, indicating a time-specific escalation in general price levels.

Rate of Unemployment

The fraction of the labor force that is in a state of unemployment but is engaged in seeking employment.

Mainstream Economists

Economists who adhere to widely accepted theories and models within the field, focusing on the analysis and understanding of economic phenomena.

Persistent Inflation

Sustained increase in the general price level of goods and services in an economy over a period of time.