Review the income statements on the Absorption Statement and Variable Statement panels, then complete the following table. The companys sales price per unit is $75.00, and the number of units in ending inventory is 4,000. Item Amount Number of units sold 16,000 Variable sales and administrative cost per unit $15.00 Number of units manufactured 20,000 Variable cost of goods manufactured per unit $28.00 Fixed manufacturing cost per unit $12.00 2: Whenever the units manufactured differ from the units sold, finished goods inventory is affected. In analyzing income from operations, such increases and decreases could be misinterpreted as operating efficiencies or inefficiencies. Each decision-making situation should be carefully analyzed in deciding whether absorption or variable costing reporting would be more useful. All costs are controllable in the long run by someone within a business. For a given level of management, costs may be controllable costs or noncontrollable costs. The production manager for Saxon, Inc. is worried because the company is not showing a high enough profit. Looking at the income statements on the Absorption Statement panel and the Variable Statement panel, he notices that the income from operations is higher on the absorption cost income statement. He is considering manufacturing another 10,000 units, up to the companys capacity for manufacturing, in the coming year. He reasons that this will boost income from operations and satisfy the companys owner that the company is sufficiently profitable. Although the total units manufactured changes, assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same. Complete questions (1)-(4) that follow. If the answer is zero, enter "0". 1. Use the income statements on the Absorption Statement and Variable Statement panels to complete the following table for the original production level. Then prepare similar income statements at a production level 10,000 units higher and add that information to the table. Assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same at both production levels. Income From Operations Original Original Additional Additional Production Production 10,000 10,000 Level-Absorption Level-Variable Units-Absorption Units-Variable $ $ $ $ Points: 0 / 4 Check My Work Following the examples on the Absorption Statement and Variable Statement panels, recompute income from operations under the absorption and variable cost methods, given that the additional units are manufactured. Dont forget that fixed costs will remain the same at any production level within the relevant range. 2. What is the change in income from operations from producing 10,000 additional units under absorption costing? $ Points: 0 / 1 Check My Work Review your chart and determine the change in income from operations, focusing only on the change in absorption costing amounts. 3. What is the change in income from operations from producing 10,000 additional units under variable costing? $ Points: 0 / 1 Check My Work Review your chart and determine the change in income from operations, focusing only on the change in variable costing amounts. Contribution margin data: For planning and control purposes, managers often compare planned and actual contribution margin. Variable costing is used as a basis for such analyses. Examine the following contribution margin data, and then complete the Contribution Margin Analysis panel. Saxon, Inc. Contribution Margin Data Schedule Actual Planned Sales $1,200,000 $1,190,000 Variable cost of goods sold $448,000 $462,000 Variable selling and administrative expenses 240,000 154,000 Total $688,000 $616,000 Contribution margin $512,000 $574,000 Number of units sold 16,000 14,000 Per unit: Sales price $75.00 $85.00 Variable cost of goods sold 28.00 33.00 Variable selling and administrative expenses 15.00 11.00 4: After reviewing the data on the Contribution Margin Data panel, complete the following contribution margin analysis. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Score: 0/44 Saxon, Inc. Contribution Margin Analysis For the Year Ended December 31 1 Planned contribution margin $310,000.00 2 Effect of changes in sales: 3 Sales quantity factor $750,000.00 4 Unit price factor 5 Total effect of changes in sales 6 Effect of changes in variable cost of goods sold: 7 Variable cost quantity factor 8 Unit cost factor 9 Total effect of changes in variable cost of goods sold 10 Effect of changes in selling and administrative expenses: 11 Variable cost quantity factor 12 Unit cost factor 13 Total effect of changes in selling and administrative expenses 14 Actual contribution margin.