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Our company manufactures a single product. The production budget indicates that the number of units expected to be produced are 193,000 in October, 201,500 in November, and 198,000 in December. We assign variable overhead at a rate of $0.75 per unit of production. Fixed overhead equals $150,000 per month. Compute the total budgeted overhead that would appear on the factory overhead budget for month of October.Group of answer choices$343,000.$150,000.$144,750.$301,125.$294,750.

Question

Our company manufactures a single product. The production budget indicates that the number of units expected to be produced are 193,000 in October, 201,500 in November, and 198,000 in December. We assign variable overhead at a rate of 0.75perunitofproduction.Fixedoverheadequals0.75 per unit of production. Fixed overhead equals 150,000 per month. Compute the total budgeted overhead that would appear on the factory overhead budget for month of October.Group of answer choices343,000.343,000.150,000.144,750.144,750.301,125.$294,750.

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Solution

To calculate the total budgeted overhead for the month of October, you need to consider both the variable and fixed overheads.

First, calculate the variable overhead: The variable overhead is assigned at a rate of $0.75 per unit of production. In October, the company expects to produce 193,000 units.

So, Variable overhead = Number of units * Overhead rate = 193,000 units * 0.75/unit=0.75/unit = 144,750

Next, add the fixed overhead: The fixed overhead is given as $150,000 per month.

So, Total Overhead = Variable overhead + Fixed overhead = 144,750+144,750 + 150,000 = $294,750

Therefore, the total budgeted overhead that would appear on the factory overhead budget for the month of October is $294,750.

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