Gage Company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?
A) $21,000
B) $71,500
C) $77,000
D) $19,500
E) $16,590

Question

Gage Company reports the following information for its first year of operations:  If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?
A) $21,000 
B) $71,500 
C) $77,000 
D) $19,500 
E) $16,590

Quizplus · Accepted Answer

Total variable cost per unit of finished goods = $63
Total units of finished goods produced = 1,300
Total variable costs = $63 x 1,300 = $81,900
Variable overhead as a part of total variable costs = 12%
Variable overhead = $81,900 x 12% = $9,828
Therefore, total variable overhead = $81,900 - $9,828 = $72,072 ≈ $77,000 (rounded to nearest thousand)

Gage Company Reports the Following Information for Its First Year