A manufacturer reports direct materials of $$5$ per unit, direct labor of $$2$ per unit, and variable overhead of $$3$ per unit. Fixed overheac is $$200,000$ per year, and the company estimates sales of $20,000$ units at a sales price of $$22$ per unit for the year. The company has no beginning finished goods inventory.

If the company uses absorption costing, compute gross profit assuming $($a$)20,000$ units are produced and $20,000$ units are sold an $($b$)25,000$ units are produced and $20,000$ units are sold.

If the company uses variable costing, how much would contribution margin differ if the company produced $25,000$ units instead of producing $20,000?$ Assume the company sells $20,000$ units. Hint: Calculations are not required.

Complete this question by entering your answers in the tabs below.

If the company uses absorption costing, compute gross profit assuming $($a$)20,000$ units are produced and $20,000$ units are sold and $($b$)25,000$ units are produced and $20,000$ units are sold.

$\backslash$table$[[,\backslash$table$[[($a$)20,000$ Units$],[$Produced and$],[20,000$ Units Sold$]],\backslash$table$[[($b$)25,000$ Units$],[$Produced and$],[20,000$ Units Sold$]]],[,,],[,,],[$Gross profit,,$]]$P