Answer:
The question is not complete. The company's cost per unit of finished goods was not added in the given data. The solution below is for $19.30 of company's cost per unit. The formula used is applicable to any unit cost given to you.
The answer is option (B) $255,000
Explanation:
Solution:
Given Data;
Units of goods Produced = 50,000
Units of goods sold = 49,000
Direct materials = $7
Direct labor = $3
Variable overhead = $210,000
Cost per unit of finished goods $19.30 ( added value)
Step 1: Calculating the total excluding fixed overhead;
<h3>
Total excluding fixed overhead =</h3><h3>
variable overhead + direct materials + direct labor---------1</h3>
Substituting the given values into equation 1, we have
Total excluding fixed overhead = (210,000/50000) + 7 + 3
= 4.2 +7+3
=$14.2
Step 2: Calculating fixed overhead of company's per unit goods;
Fixed overhead per unit= Total cost per unit of finished goods - Total
excluding fixed overhead -----------------2
Substituting into equation 2, we have
Fixed overhead per unit = 19.3 -14.2
= $5.1 ( for 1 unit)
Step 3: Calculating the total fixed over head;
Total fixed overhead = Units produced × Fixed overhead per unit------3
Substituting into equation 3, we have
Total fixed overhead = 50,000 × 5.1
= $255,000
