A company reports the following information regarding its production cost:Units produced14,000 unitsDirect labor$13 per unitDirect materials$3 per unitVariable overhead? in totalFixed overhead$56,000 in totalRequired: Perform the following independent calculations.a. Compute total variable overhead cost if the production cost per unit under variable costing is $73.b. Compute total variable overhead cost if the production cost per unit under absorption costing is $73.
What will be an ideal response?
a. $13 DL + $3 DM + (VOH/14,000) = $73
VOH/14,000 = $57
Total VOH = ($57 × 14,000) = $798,000
b. $13 DL + $3 DM + (VOH/14,000) + ($56,000/14,000) FOH = $73
VOH/14,000 = $53
Total variable overhead = ($53 × 14,000) = $742,000
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