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JKL Co

Management

JKL Co. has total budgeted fixed costs of $75,000. Actual production of 19,500 units resulted in a $3,000 unfavorable volume variance. What normal capacity was used to determine the fixed overhead rate?

 

Choices

 

18,750

 

17,590

 

16,500

 

20,313

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Computation of Normal Capacity use to determine the Fixed Overhead Rate:

Fixed Overhead Applied = $75000-$3000 = $72000

Overhead rate per unit = 72000/19,500= $3.69

Normal capacity = 75000/3.69 = 20,312.50 or 20,313 units

So, the correct option is 4th "20,313 units".