Question

A company reports the following information for its first year of operations:

Units produced this year ? units
Units sold this year 1,500 units
Direct materials $ 9 per unit
Direct labor $ 5 per unit
Variable overhead $ 7 per unit
Fixed overhead $ 24,000 in 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.

Answer 1

Total Units produced in the year are 4000 Units

Step-by-step explanation:

We have $27 absorption cost per unit after deduction all variable cost like material $9, Direct labor $5 and Variable overhead $7 we get fixed cost per unit $6.

In order get number of units produced is calculated through using the formula (Total Fixed cost / Fixed cost Per Unit ) = (24000 / 6) = 4000 Units. Hence, company produced the 4000 Units.