Exercise 19-15 (Algo) Absorption costing and overproduction LO C1 A manufacturer reports direct materials of $6 per unit, direct labor of $3 per unit, and varlable overhead of $4 per unit. Fixed overhead is $148,000 per year, and the company estimates sales of 14,800 units at a sales price of $26 per unit for the year. The company has no beginning finished goods inventory. 1. If the company uses absorption costing, compute gross profit assuming (a) 14,800 units are produced and 14,800 units are sold and (b) 18,500 units are produced and 14,800 units are sold, 2. If the company uses variable costing, how much would contribution margin differ if the company produced 18,500 units instead of producing 14,800 ? Assume the company sells 14,800 units, Hint Calculations are not required, If the company uses absorption costing, compute gross profit assuming (a) 14,800 units are produced and 14,800 units are sold and (b) 18,500 units are produced and 14,800 units are sold. If the company uses variable costing, how much would contribution margin differ if the company produced 18,500 units instead of producing 14,800 ? Assume the company sells 14,800 units. Hint: Calculations are not required