Clear Company reports the following information for its first year of operations

Question

Clear Company reports the following information for its first year of operations:

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

? in total

If the company's cost per unit of finished goods using absorption costing is $19.30, what is total fixed overhead?

A.

$350,000

B.

$255,000

C.

$150,000

D.

$249,900

E.

$147,000

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

? in total

Explanation / Answer

Answer= B-$255,000

Particulars Amount ( $ per unit) Direct materials 7 Direct labor 3 Variable overhead(210000/50000) 4.2 Total excluding fixed overhead 14.2 Total cost per unit of finished goods 19.3 Fixed overhead per unit (19.3-14.2) 5.1 Total fixed ovehead( 50000*5.1) $255000

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