Chapter $6$

i

A manufacturer reports direct materials of $$5$ per unit, direct labor of $$2$ per unit, and variable overhead of $$3$ per unit. Fixed overhead is $$132,000$ per year, and the company estimates sales of $13,200$ 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$)13,200$ units are produced and $13,200$ units are sold and $(b)16,500$ units are produced and $13,200$ units are sold.

If the company uses variable costing, how much would contribution margin differ if the company produced $16,500$ units instead of producing $13,200?$ Assume the company sells $13,200$ units. Hint: Calculations are not required.

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

Required $1$

Required $2$

If the company uses absorption costing, compute gross profit assuming $($a$)13,200$ units are produced and $13,200$ units are sold and $($b$)16,500$ units are produced and $13,200$ units are sold.

$\backslash$table$[[,\backslash$table$[[($a$)13,200$ Units$],[$Produced and$],[13,200$ Units Sold$]],\backslash$table$[[($b$)16,500$ Units$],[$Produced and$],[13,200$ Units Sold$]]],[$Sales$,$$$,290,400,$$$,290,400],[$Cost of goods sold,,$264,000,,],[$Gross profit,$$,26,400,,]]$