Exercise 19-15 (Algo) Absorption costing and overproduction LO C1 A manufacturer reports direct materials of $7 per unit, direct labor of $4 per unit, and variable overhead of $5 per unit. Fixed overhead is $140,000 per year, and the company estimates sales of 14,000 units at a sales price of $30 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) 14,000 units are produced and 14,000 units are sold and (b) 17,500 units are produced and 14,000 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 17,500 units instead of producing 14,000? Assume the company sells 14,000 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) 14,000 units are produced and 14,000 units are sold and (b) 17,500 units are produced and 14,000 units are sold. (a) 14,000 Units Produced and 14,000 Units Sold (b) 17,500 Units Produced and 14,000 Units Sold Gross profit Required 1 Required 2 >