A Company Reports the Following Information Regarding Its Production Cost

question 160

Essay

A company reports the following information regarding its production cost.
Required: Perform the following independent calculations. $$\begin{array} { l l } \text { Units produced } & 22,000 \text { units } \\\text { Direct labor } & \$ 31 \text { per unit } \\\text { Direct materials } & \$ 27 \text { per unit } \\\text { Variable overhead } & ? \text { in total } \\\text { Fixed overhead } & \$ 2,750,000 \text { in total }\end{array}$$
(a.) Compute total variable overhead cost if the production cost per unit under variable costing is $240.
(b.) Compute total variable overhead cost if the production cost per unit under absorption costing is $240.

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Definitions:

Wall Street Rule

A principle suggesting that investors should sell shares of firms that adopt unwelcome or undesirable policies instead of seeking to change the management's actions through engagement.

Co-Determination

a system or practice, particularly in some European countries, where workers or their representatives have a role in the management and decision-making processes of a business.

Compensation Committee

A committee within a board of directors, responsible for recommending policies on executive compensation, including salaries, incentives, and benefit plans.

Audit Committee

In corporation law, a committee of the board that recommends and supervises the public accountant who audits the corporation’s financial records.