Question
The Colin Division of Pharoah Company sells its product for $ 34 per unit. Variable costs per unit include: manufacturing, $ 12; and selling and
The Colin Division of Pharoah Company sells its product for $ 34 per unit. Variable costs per unit include: manufacturing, $ 12; and selling and administrative, $ 4. Fixed costs are: $ 200000 manufacturing overhead, and $ 53000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Kenneth Clark, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 40000units or 53000 units next year. What would the net income be under variable costing for each alternative?
40000 units 53000 units
- $ 467000 $ 650000
- $ 467000 $ 517600
- $ 467000 $ 467000
- $ 507000 $ 467000
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