Cost of Prediction Error-Differential Costs (20.4): South Bend Company estimates the following costs, prices, and volume for its single product:

Based on this forecast, they produced 25,000 units. Prices and costs were as forecast, but the demand for the product turned out to be 30.000 units, which they could have produced without additional fixed costs. Assume that the excess demand was lost and cannot be met in subsequent periods.

Required:

Compute the cost of prediction error.

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Selling price Manufacturing costs: Material Direct labor Variable overhead Fixed overhead (allocated on basis of direct labor-hours) Sales volume Per Unit $ 450 75 135 25 50 25,000 units