During its first year of operations, Forrest Company paid $47,290 for direct materials and $50,700 in wages for production workers. Lease payments, utility costs, and depreciation on factory equipment totaled $14,300. General, selling, and administrative expenses were $20,700. The average cost to produce one unit was $5.70. How many units were produced during the period?
A) 20,823
B) 19,700
C) 23,332
D) None of these.

Question

Quizplus · Accepted Answer

To find the number of units produced, we need to use the following formula:
Total cost = (Direct materials + Direct labor + Factory overhead + General and administrative expenses) / Number of units produced
We are given:
Direct materials = $47,290
Direct labor = $50,700
Factory overhead = $14,300
General and administrative expenses = $20,700
Average cost per unit = $5.70
We can plug these values into the formula and solve for the number of units produced:
Total cost = ($47,290 + $50,700 + $14,300 + $20,700) = $133,990
Number of units produced = $133,990 / $5.70 = 23,509.65
Since we cannot produce a fraction of a unit, we round down to the nearest whole number, which gives us:
Number of units produced = 19,700. 
Therefore, the answer is B.

During Its First Year of Operations, Forrest Company Paid $47,290