170. Correct answer c. Fixed manufacturing overhead is applied to each product at the rate of
$20 ($100,000 ÷ 5,000). If Troughton manufactures an additional 1,500 units, fixed
manufacturing overhead would be over-applied by $30,000 (1,500 x $20). As stated in the
problem, the company would reduce the cost of goods sold by the amount of over-applied
overhead, thus increasing operating income by $30,000 to the desired $50,000.
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