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Accounting Question

I need help with this practice test so I can compare. Answers only is fine ( whatever the directions call for )

Multiple Choice:
1. At the beginning of the year, a company estimates total direct materials costs of $1,930,000
and total overhead costs of $2,759,900. If the company uses direct materials costs as its activity
base to apply overhead, what is the predetermined overhead rate it should use during the year?
A. 100%
B. 143%
C. 70%
D. 43%
E. 30%
2. Oxford Company uses a job order costing system. This month, the system accumulated labor
time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. The journal entry to
record direct labor consists of a:
A. Debit Payroll Expense $24,600; credit Cash $24,600
B. Debit Payroll Expense $24,600; credit Factory Wages Payable $24,600
C. Debit Work in Process Inventory $24,600; credit Factory Wages Payable $24,600
D. Debit Work in Process Inventory $28,900; credit Factory Wages Payable $28,900
E. Debit Work in Process Inventory $4,300; credit Factory Wages Payable $4,300
3. Mesa Corporation allocates overhead to production on the basis of direct labor costs. Mesa’s
total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the
amount of overhead applied to a job which used $20,000 of direct labor.
A. $8,000
B. $20,000
C. $70,000
D. $50,000
E. $90,000
4. If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor, sold for
$8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit
was realized from this sale?
A. $8.00
B. $5.50
C. $2.50
D. $1.60
E. $0.90
5. Morris Company applies overhead based on direct labor costs. For the current year, Morris
Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000.
Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled
$1,800,000. At year-end, the balance in the Factory Overhead account is a:
A. $380,000 Debit balance
B. $360,000 Debit balance
C. $20,000 Debit balance
D. $400,000 Credit balance
E. $20,000 Credit balance
6. Clemens Company applies overhead based on direct labor cost. Estimated overhead and direct
labor costs for the year were $112,500 and $125,000, respectively. During the year, actual
overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or
underapplied overhead at year-end, assuming an immaterial amount, would include:
A. A debit to Cost of Goods Sold for $600
B. A credit to Factory Overhead for $600
C. A credit to Finished Goods Inventory for $600
D. A debit to Work in Process Inventory for $600
E. A credit to Cost of Goods Sold for $600
7. Minstrel Manufacturing uses a job order costing system. During the month, Minstrel
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000
was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The
journal entry to record the issuance of direct materials to production is:
A. Debit Raw Materials Inventory $165,000; credit Accounts Payable $165,000
B. Debit Work in Process Inventory $195,000; credit Raw Materials Inventory $195,000
C. Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000
D. Debit Work in Process Inventory $165,000; credit Raw Materials Inventory $165,000
E. Debit Raw Materials Inventory $165,000; credit Work in Process Inventory $165,000
8. Minstrel Manufacturing uses a job order costing system. During the month, Minstrel
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000
was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The
total manufacturing costs added during the period is:
A. $440,000
B. $470,000
C. $500,000
D. $570,000
E. $540,000
9. Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and the
overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing
the inventory?
A. $31,600
B. $58,000
C. $56,000
D. $60,000
E. $86,400
10. A production department’s output for the most recent month consisted of 18,500 units
completed and transferred to the next stage of production and 18,500 units in ending Work in
Process inventory. The units in ending Work in Process inventory were 65% complete with
respect to both direct materials and conversion costs. There were 2,700 units in beginning Work
in Process inventory, and they were 85% complete with respect to both direct materials and
conversion costs. Calculate the equivalent units of production for the month, assuming the
company uses the weighted average method.
A. 30,930 units
B. 18,905 units
C. 30,525 units
D. 20,795 units
E. 18,500 units
11. At the beginning of the month, the Forming department of Martin Manufacturing had 10,000
units in inventory, 30% complete as to materials, and 10% complete as to conversion. During the
month the department started 60,000 units and transferred 62,000 units to the next manufacturing
department. At the end of the month, the department had 8,000 units in inventory, 80% complete
as to materials and 60% complete as to conversion. How many units did the Forming department
start and complete in the current month?
A. 62,000
B. 60,000
C. 58,000
D. 68,000
E. 52,000
12. Bryant Manufacturing produces its product in two sequential departments. During October,
the first process finished and transferred 300,000 units of its product to the second process. Of
these units, 60,000 were in process at the beginning of the month and 240,000 were started and
completed during the month. At month end, 40,000 units were in process. Using the FIFO
method, compute the number of equivalent units of production for direct materials for the first
process for October assuming that all direct materials are added to products when processing
begins.
A. 200,000
B. 240,000
C. 280,000
D. 300,000
E. 340,000
13. During December, the production department of a process operations system completed and
transferred to finished goods a total of 63,000 units of product. At the end of March, 20,000
additional units were in process in the production department and were 40% complete with
respect to direct materials. The beginning inventory included materials cost of $59,400 and the
production department incurred direct materials cost of $188,700 during December. Compute the
direct materials cost per equivalent unit for the department using the weighted-average method.
A. $3.94
B. $2.66
C. $2.99
D. $3.49
E. $3.00
14. A manufacturer estimates total factory overhead costs of $5,280,000 and total direct labor
costs of $2,400,000 for its first year of operations. During January, the company used $120,000
of direct labor cost in its Blending department and $95,000 of direct labor cost in its Bottling
department. Compute the predetermined overhead rate as a percentage of direct labor cost.
A. 45%
B. 126%
C. 220%
D. 120%
E. 79%
15. A firm expects to sell 25,200 units of its product at $7 per unit. Income is predicted to be
$60,200. If the variable costs per unit are $3, total fixed costs must be:
A. $176,400
B. $116,200
C. $40,600
D. $15,400
E. $75,600
16. Henderson Company has fixed costs of $36,000 and a contribution margin ratio of 24%. If
expected sales are $200,000, what is the margin of safety as a percent of sales?
A. 6%
B. 25%
C. 33%
D. 50%
E. 75%
17. A product sells for $30 per unit and has variable costs of $16.25 per unit. The fixed costs are
$921,250. If the variable costs per unit were to decrease to $15.35 per unit, fixed costs increase
to $981,550, and the selling price does not change, break-even point in units would:
A. Equal 6,000
B. Increase by 2,010
C. Increase by 21,983
D. Not change
E. Decrease by 21,983
18. Forrester Company is considering buying new equipment that would increase monthly fixed
costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per
unit. The selling price of $100 is not expected to change. Forrester’s current break-even sales are
$400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the
revised break-even point in dollars would be:
A. $300,000
B. $400,000
C. $325,000
D. $500,000
E. $375,000
19. Leeks Company’s product has a contribution margin per unit of $11.25 and a contribution
margin ratio of 22.5%. What is the selling price of the product?
A. $5
B. $20
C. $30
D. $40
E. $50
20. Helpful Hardware sells windows (80% of sales) and doors (20% of sales). The selling price
of each window is $600 and of each door is $1,200. The variable cost of each window is $400
and of each door is $900. Fixed costs are $1,771,000. The weighted-average contribution margin
is:
A. $500
B. $270
C. $180
D. $360
E. $220
21. Helpful Hardware sells windows (80% of sales) and doors (20% of sales). The selling price
of each window is $400 and of each door is $1,000. The variable cost of each window is $250
and of each door is $700. Fixed costs are $1,440,000. The number of units of each product that
will be sold at the break-even point is:
A. Windows, 0 units; Doors, 8,000 units
B. Windows, 8,000 units; Doors, 0 units
C. Windows, 8,000 units; Doors, 8,000 units
D. Windows 1,600 units; Doors, 6,400 units
E. Windows, 6,400 units; Doors, 1,600 units
22. Bradley Company manufactures a single product that sells for $470 per unit and whose
variable costs are $329 per unit. The company’s annual fixed costs are $1,818,880. The
contribution margin ratio is:
A. 30.0%
B. 25.0%
C. 42.9%
D. 60.0%
E. 70.0%
23. Tao Company has fixed costs of $708,000. Its single product sells for $350 per unit, and
variable costs are $232 per unit. If the company expects sales of 10,000 units, its margin of
safety in dollars is:
A. $3,500,000
B. $1,400,000
C. $2,100,000
D. $928,000
E. $2,320,000
24. A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first
quarter and 30,000 pairs in the second quarter of the upcoming year. Each pair of boots requires
2 kilograms (kg) of a key raw material. The company aims to end each quarter with ending raw
materials inventory equal to 20% of the following quarter’s material needs. Beginning inventory
for this material is 18,000 kg and the cost per kg is $8. What is the budgeted materials purchases
cost for the first quarter?
A. $720,000
B. $672,000
C. $576,000
D. $729,600
E. $864,000
25. A company’s history indicates that 30% of its sales are for cash and the rest are on credit.
Collections on credit sales are 25% in the month of the sale, 55% in the month after the sale,
15% in the second month after the sale and 5% is uncollectible. Projected sales for December,
January, and February are $74,000, $99,000 and $109,000, respectively. The February expected
cash receipts from current and prior credit sales is:
A. $59,510
B. $64,960
C. $70,410
D. $31,455
E. $114,400
26. Cahuilla Corporation predicts the following sales in units for the coming four months:
Each month’s ending Finished Goods Inventory in units should be 30% of the next month’s sales.
March 31 Finished Goods inventory is 75 units. A finished unit requires five pounds of direct
material B at a cost of $3.00 per pound. The March 31 Raw Materials Inventory has 210 pounds
of direct material B. Each month’s ending Raw Materials Inventory should be 20% of the
following month’s production needs. The budgeted purchases of pounds of direct material B
during May should be:
A. 1,476 pounds
B. 296 pounds
C. 1,772 pounds
D. 292 pounds
E. 1,184 pounds
27. Zhang Industries sells a product for $700 per unit. Unit sales for May were 400, and each
month’s unit sales are expected to grow by 3%. Zhang pays a sales manager a monthly salary of
$3,000 and a commission of 2% of sales. Compute the budgeted selling expense for the manager
for the month ended June 30.
A. $8,600
B. $11,652
C. $8,652
D. $5,768
E. $8,768
28. The sales budget for Modesto Corporation shows that 26,000 units of Product B will be sold
in the current month and 31,000 units will be sold in the next month. Beginning inventory on
April 1 is 2,600 units, and the company wants to have 10% of the next month’s sales in inventory
at the end of each month. Budgeted purchases of Product B for the current month would be:
A. 28,500 units
B. 26,500 units
C. 20,500 units
D. 30,500 units
E. 24,500 units
29. A company’s flexible budget for 14,000 units of production showed sales, $47,600; variable
costs, $15,400; and fixed costs, $24,000. The variable costs expected if the company produces
and sells 24,000 units is:
A. $47,600
B. $71,600
C. $50,400
D. $26,400
E. $15,400
30. Based on a predicted level of production and sales of 12,000 units, a company anticipates
reporting income of $15,000 after deducting variable costs of $72,000 and fixed costs of $9,000.
Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units
would be:
A. $9,000 of fixed costs and $84,000 of variable costs
B. $11,250 of fixed costs and $90,000 of variable costs
C. $9,000 of fixed costs and $90,000 of variable costs
D. $9,000 of fixed costs and $72,000 of variable costs
E. $11,250 of fixed costs and $72,000 of variable costs
31. A company has established 5 pounds of Material J at $2 per pound as the standard for the
material in its Product Z. The company has just produced 1,000 units of this product, using 5,200
pounds of Material J that cost $9,880. The direct materials quantity variance is:
A. $400 unfavorable
B. $120 favorable
C. $400 favorable
D. $520 favorable
E. $520 unfavorable
32. Sanchez Company’s output for the current period was assigned a $200,000 standard direct
materials cost. The direct materials variances included a $5,000 favorable price variance and a
$3,000 unfavorable quantity variance. What is the actual total direct materials cost for the current
period?
A. $208,000
B. $198,000
C. $202,000
D. $192,000
E. $205,000
33. Fletcher Company collected the following data regarding production of one of its products.
Compute the fixed overhead variance
A. $18,300 favorable
B. $18,000 favorable
C. $18,000 unfavorable
D. $18,300 unfavorable
E. $14,300 unfavorable
34. Product A requires 5 machine hours per unit to be produced, Product B requires only 3
machine hours per unit, and the company’s productive capacity is limited to 240,000 machine
hours. Product A sells for $16 per unit and has variable costs of $6 per unit. Product B sells for
$12 per unit and has variable costs of $5 per unit. Assuming the company can sell as many units
of either product it produces, the company should:
A. Produce only Product A
B. Produce only Product B
C. Produce equal amounts of A and B
D. Produce A and B in the ratio of 62.5% A to 37.5% B
E. Produce A and B in the ratio of 40% A and 60% B
35. Kobe Company has manufactured 200 partially finished cabinets at a cost of $100,000. These
can be sold as is for $120,000. Instead, the cabinets can be stained and fitted with hardware to
make finished cabinets. Further processing costs would be $24,000, and the finished cabinets
could be sold for $160,000. If Kobe Company processes the cabinets further, incremental income
is:
A. $40,000
B. $76,000
C. $60,000
D. $16,000
E. $26,000
36. Bannister Company is thinking about having one of its products manufactured by a
subcontractor. Making this product incurs per unit variable costs of $45.00 for direct materials
and $30.00 for direct labor. Incremental overhead to make this product is $29.40 per unit. If
Bannister can buy 1,000 units from an outside supplier for $100,000, it should:
A. Make the product because current factory overhead is less than $100,000.
B. Make the product because the total incremental costs of manufacturing is less than $100,000.
C. Buy the product because the total incremental costs of manufacturing are greater than
$100,000.
D. Buy the product because total fixed and variable manufacturing costs are greater than
$100,000.
E. Make the product because factory overhead is a sunk cost.
37. Elliot Company produces two products, Product A and Product B. Elliot can sell all the units
it produces of each product, but it has limited production capacity. Product A requires 4 direct
labor hours per unit, and Product B requires 5 direct labor hours per unit. Contribution margin
per unit is $220 for Product A and $250 for Product B. If the company has 20,000 direct labor
hours available, the best sales mix is:
A. 2,000 units of Product A and 2,500 units of Product B
B. 2,500 units of Product A and 2,000 units of Product B
C. 0 units of Product A and 2,000 units of Product B
D. 4,000 units of Product A and 0 units of Product B
E. 5,000 units of Product A and 0 units of Product B
38. A project requires a $28,000 initial investment and is expected to generate end-of-period
annual cash inflows as follows:
Assuming a discount rate of 10%,
what is the net present value (rounded to the nearest whole dollar) of this investment?
A. $0
B. $2,668
C. ($7,461)
D. $30,668
E. ($4,967)
39. A company is planning to purchase a machine that will cost $24,000, will have a six-year life,
and will have no salvage value. The company expects to sell the machine’s output of 3,000 units
evenly throughout each year. A projected income statement for each year of the asset’s life
appears below. What is the accounting rate of return for this machine?
A. 33.3%
B. 16.7%
C. 50.0%
D. 8.3%
E. 4.0%
40. Cliff Company wants to purchase an asset for $82,000, but needs to earn a return of 9%. The
expected year-end net cash flows are $32,000 in each of the first three years, and $36,000 in the
fourth year. The machine is expected to have no salvage value at the end of it’s useful life. What
is the machine’s net present value (round to the nearest whole dollar)?
A. ($998)
B. $24,504
C. $106,504
D. ($56,498)
E. $132,000
41. A new manufacturing machine is expected to cost $277,200, have an eight-year life, and a
$30,000 salvage value. The machine will yield an annual income of $35,000. Annual
depreciation expense is $31,000 per year. Compute the payback period for the purchase.
A. 8.7 years
B. 3.8 years
C. 4.2 years
D. 7.3 years
E. 5.4 years
42. Urban Company reports the following information regarding its production cost:
Units produced
20,000 units
Direct labor
$ 13
per
unit
Direct materials
$ 18
per
unit
Variable overhead
$ 11
per
unit
Fixed overhead
$ in
110,000 total
Compute product cost per unit under variable costing.
A. $18.00
B. $36.50
C. $42.00
D. $13.00
E. $31.00
43. Belle Company reports the following information for the current year. All beginning
inventory amounts equaled $0 this year.
Units produced this year
25,000 units
Units sold this year
15,000 units
Direct materials
$9
per
unit
Direct labor
$ 11
per
unit
Variable overhead
$3
per
unit
Fixed overhead
$ in
137,500 total
Given Belle Company’s data, compute cost of finished goods in inventory under variable costing.
A. $285,000
B. $712,500
C. $427,500
D. $230,000
E. $345,000
44. Belle Company reports the following information for the current year. All beginning
inventory amounts equaled $0 this year.
Units produced this year
35,000 units
Units sold this year
21,000 units
Direct materials
$ 15
per
unit
Direct labor
$ 17
per
unit
Variable overhead
$3
per
unit
Fixed overhead
$ in
105,000 total
Belle Company’s product is sold for $62 per unit a Variable selling and administrative expense is
$2 per unit and fixed selling and administrative is $230,000 per year. Compute the net income
under variable costing.
A. $62,000
B. $190,000
C. $151,900
D. $149,200
E. $266,200
45. A company reports the following information for its first year of operations:
Units produced this year
Units sold this year
? units
1,500 units
Direct materials
$9
per
unit
Direct labor
$5
per
unit
Variable overhead
$7
per
unit
Fixed overhead
$ in
24,000 total
If the company’s cost per unit of finished goods using absorption costing is $27, how many units
were produced?
A. 4,000 units
B. 3,600 units
C. 1,846 units
D. 2,667 units
E. 2,000 units
46. Jeter Corporation had net income of $214,000 based on variable costing. Beginning and
ending inventories were 6,200 units and 10,400 units, respectively. Assume the fixed overhead
per unit was $4 for both the beginning and ending inventory. What is net income under
absorption costing?
A. $255,600
B. $230,800
C. $247,600
D. $280,400
E. $214,000
47. Given the following data, calculate the product cost per unit under absorption costing.
Direct labor
$ 3.50
per
unit
Direct materials
$ 1.25
per
unit
Variable overhead
$ 2.30
per
unit
Fixed overhead
$ per
149,940 year
Units produced per year
18,000 units
A. $4.75 per unit
B. $7.05 per unit
C. $13.08 per unit
D. $15.38 per unit
E. $16 per unit
Problems:
48. Grace manufactures and sells miniature digital cameras for $200 each. Sales in May were
2,100 units, and management forecasts 3% growth in unit sales each month.
(a) Determine the budgeted sales units of cameras for June.
(b) Prepare the sales budget for June.
49. Champ Incorporated budgets the following sales in units for the coming two months. Each
month’s ending inventory of finished units should be 60% of the next month’s sales. The April
30 finished goods inventory is 108 units. Prepare the production budget for May.
50. Tora Company plans to produce 1,150 units in July. Each unit requires two hours of direct
labor. The direct labor rate is $15 per hour. Prepare a direct labor budget for July.
51. Hockey Pro budgets 380 hours of direct labor during May. The company applies variable
overhead at the rate of $15 per direct labor hour. Budgeted fixed overhead equals $41,000 per
month. Prepare a factory overhead budget for May.
52. Argenta, Incorporated is preparing its master budget for the first quarter ending March 31.
The following forecasted data relate to the first quarter:
Prepare a budgeted income statement for the first quarter.
53. For the current period, Kay Company’s manufacturing operations show a $4,000 unfavorable
direct materials price variance. The actual price per pound of material is $78; the standard price
is $77.50 per pound. How many pounds of material were used in the current period?
54. A company shows a $21,000 unfavorable direct labor rate variance and a $17,000
unfavorable direct labor efficiency variance. The company’s standard cost of direct labor is
$370,000. What is the actual cost of direct labor?
55. Maxwell Company collected the following information about its production activities for the
current year.
Actual costs and quantities:
Direct materials used 95,000 Pounds @ $6.30 per Pound
Units completed during the year, 50,000 units
Standard costs and quantities:
Standard Price per Pound of direct material, $6.05
Two Pounds of direct material per unit
(a) Compute the direct materials price and quantity variances and indicate whether each is
favorable or unfavorable
56. Garcia Company has 10,000 units of its product that were produced at a cost of $150,000.
The units were damaged in a rainstorm. Garcia can sell the units as scrap for $20,000, or it can
rework the units at a cost of $38,000 and then sell them for $50,000.
(a) Prepare a scrap or rework analysis of income effects.
(b) Should Garcia sell the units as scrap or rework them and then sell them?
57. Ibez Company is considering a project that requires an initial investment of $72,000 and will
generate net cash flows of $16,100 per year for 5 years. Ibez requires a return of 10% on its
investments.
(a) Compute the net present value of the project.
(b) Determine whether the project should be accepted or rejected on the basis of net present
value.
58. Prepare journal entries to record the following transactions and events for April using a job
order costing system.
(a) Purchased raw materials on credit, $69,000.
(b) Raw materials used in production: $26,000 direct and $5,400 indirect.
(c) Factory payroll totaled $46,000, including $9,500 indirect labor.
(d) Applied overhead totaling $28,200.
(e) Paid other actual overhead costs totaling $14,500 cash.
(f) Finished and transferred jobs totaling $77,500.
(g) Jobs costing $58,800 were sold on credit for $103,
(a)
(B)
(C)
(D)
(e)
(f)
(G)
59. Chen Service applied overhead on the basis of direct labor costs during the current year.
Overhead applied was $16,500. Actual overhead incurred was $17,200. Prepare the adjusting
journal entry for over- or underapplied overhead.
60. A company’s January 1 Work in Process inventory contained 30,000 units that were 25%
complete with respect to direct labor. The beginning inventory was completed this year and
another 120,000 units were started. Of those started, 80,000 were finished and the remaining
40,000 were 30% complete. Calculate the equivalent units of production for the year using the
FIFO method.
61. During the year, LT Corporation introduced 132,000 units into production and 144,000 units
were completed and transferred to finished goods. At the end of the year, the company had
13,600 units in process that were 80% complete. Determine how many units the company had in
Work in Process at the beginning of the year.
62. A product is sold for $45 and has variable costs of $33 per unit. The total fixed costs for the
firm are $180,600. If the firm desires to earn a target income of $77,400, how many units must
be sold?
63. Magnolia Company is considering the production and sale of a new product with the
following sales and cost data: unit sales price, $350; unit variable costs, $180; total fixed costs,
$399,500; and projected sales, $910,000. Round your answers to the nearest whole unit or dollar.
(a) Calculate break-even in units.
(b) Calculate break-even in dollars (use four decimal places when calculating the contribution
margin ratio).
(c) Calculate number of units that would need to be sold to generate an income of $419,900.
(d) Calculate dollar sales that would be needed to generate the same profit as above.
(e) Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.
Be sure to label each calculation and show all calculations.
64. Grand Hotel and Suites is a hotel with 300 suites. Its regular suite price is $500 per night per
suite. The hotel’s total cost per night is $280 per suite and consists of the following.
Variable cost
$
220
Fixed cost
60
Total cost per night per suite
$
280
The hotel manager receives an offer to hold the local Cycling Club meeting at the hotel in
March, which is the hotel’s slow season with a low occupancy rate per night. The Cycling
Club would reserve 300 suites for one night if the hotel accepts a price of $250 per night.
(a) What is the contribution margin from this special offer?
(b) Should the Cycling Club offer be accepted or rejected?
65. Blackbird, Incorporated reports the following information regarding its production cost:
Units produced
39,000 units
Direct labor
$ 13
per
unit
Direct materials
$ 17
per
unit
Variable overhead
$ 200
per
unit
Fixed overhead
$ in
9,750,000 total
(a) Compute product cost per unit under variable costing.
(b) Compute product cost per unit under absorption costing.

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