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23 July, 17:04

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

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  1. 23 July, 17:09
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    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
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