If Total Fixed Costs Are $60 000 What Is the Per

question 56

Multiple Choice

If total fixed costs are $60 000 what is the per unit overhead cost for Denim Co if 15,000 units are produced? Assume units of production are used as the basis for applying overhead to product.

• A) $4.00
• B) $40.00
• C) $0.25
• D) $0.50

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Definitions:

Price Variance

The difference between the actual price paid for a good or service and its expected (budgeted) price.

Standard Cost Cards

Documentation that records the expected costs of materials, labor, and overhead for a product, used for budgeting and performance evaluation.

Work in Process

Work in Process (WIP) is an account used in inventory accounting that tracks the cost of materials and labor for products that are at various stages of production but are not yet completed.

Overhead Controllable Variance

The difference between actual and budgeted overhead costs that is directly manageable or controllable by management.