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Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product at a price of $60
Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product at a price of $60 per unit. If Ramort doubles its production to 40,000 units while sales remain at the current 20,000-unit level, by how much would the company's contribution margin increase or decrease under variable costing?
Direct materials | $ | 10 | per unit |
Direct labor | $ | 12 | per unit |
Overhead costs for the year | |||
Variable overhead | $ | 3 | per unit |
Fixed overhead per year | $ | 40,000 | |
Selling and adminstrative costs for the year | |||
Variable | $ | 2 | per unit |
Fixed | $ | 65,200 | |
Normal production level (in units) | 20,000 | units | |
|
Would the income be different if using variable costing instead of absorption costing?
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