Question

lear Company reports the following information for its first year of operations: Units produced this year 50,000 unitsUnits sold this year 49,000 unitsDirect materials $7 per unitDirect labor $3 per unitVariable overhead $210,000 in totalFixed overhead ? in totalIf the company's cost per unit of finished goods using absorption costing is $19.30, what is total fixed overhead?a. $350,000b. $255,000c. $150,000d. $249,900e. $147,000

Answer 1

Answer:

Total fixed overhead= $255,000

Explanation:

Giving the following information:

Units produced this year 50,000 units

Units sold this year 49,000 units

Direct materials $7 per unit

Direct labor $3 per unit

Variable overhead $210,000 in total

Fixed overhead= ?

The company's cost per unit of finished goods using absorption costing is $19.30

Under absorption costing the fixed overhead gets allocated to the cost per unit.

Cost per unit= direct material + direct labor + variable overhead + fixed overhead

19.30= 7 + 3 + 210,000/50,000 + unitary fixed overhead

19.3= 7 + 3 + 4.2 + unitary fixed overhead

5.1= unitary fixed overhead

Total fixed overhead= 5.1*50,000= $255,000