Glaston Company manufactures a single product using a JIT inventory system. The production budget indicates that the number of units expected to be produced are 193,000 in October, 201,500 in November, and 198,000 in December. Glaston assigns variable overhead at a rate of $0.75 per unit of production. Fixed overhead equals $150,000 per month. Compute the total budgeted overhead that would appear on the factory overhead budget for month of October.
A) $301,125.
B) $343,000.
C) $294,750.
D) $150,000.
E) $144,750.

Question

Quizplus · Accepted Answer

To calculate the total budgeted overhead for October, we need to add up the variable and fixed overhead costs.

Variable overhead cost per unit = $0.75
Units produced in October = 193,000

Variable overhead cost for October = $0.75 × 193,000 = $144,750

Fixed overhead cost for October = $150,000

Total budgeted overhead for October = Variable overhead cost + Fixed overhead cost 
= $144,750 + $150,000 
= $294,750

Therefore, the best choice is C.

Glaston Company Manufactures a Single Product Using a JIT Inventory