Solkow Company was just awarded a patent on a highly-specialized device. The eng

Question

Solkow Company was just awarded a patent on a highly-specialized device. The engineer has set a strict production gudelinec Afer making a mid-range plan for the company, the company expects the following for the next 2 ycars S 130 elling price per unit anable costs per unit Direct materials Direct labor Variable overhead S10 S30 $6 Fixed factory overhead cost per year Selling and administrative expense per year (all fixed S14,600 car Production (units Sales (units) Income (absorption costing) 2,000 1,500 2,000 2,500 S45,100 $84,900 What is the fixed factory overhead cost per year? A $206,000 566.300 $88,400 S103,000 E None of the above

Explanation / Answer

ans) Option (B) 66,300

Sales = 130

Less: Variable cost (46)

(10 + 30 +6)

Contribution per unit 84

Total contribution = 84 X 1500 = 126000

Less: Income = (45100)

Selling and administration expense = (14600)

Fixed factory overhead 66300

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