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JKL Co
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
Expert Solution
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".
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