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 variable overhead of $5 per unit. Fixed overhead is $136,000 per year, and the company estimates sales of 13,600 units at a sales price of $25 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) 13,600 units are produced and 13,600 units are sold and (b) 17,000 units are produced and 13,600 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 17,000 units instead of producing 13,600? Assume the company sells 13,600 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) 13,600 units are produced and 13,600 units are sold and (b) 17,000 units are produced and 13,600 units are sold. Sales Cost of goods sold Gross profit (a) 13,600 Units (b) 17,000 Units Produced and Produced and 13,600 Units Sold 13,600 Units Sold
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 variable overhead of $5 per unit. Fixed overhead is $136,000 per year, and the company estimates sales of 13,600 units at a sales price of $25 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) 13,600 units are produced and 13,600 units are sold and (b) 17,000 units are produced and 13,600 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 17,000 units instead of producing 13,600? Assume the company sells 13,600 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) 13,600 units are produced and 13,600 units are sold and (b) 17,000 units are produced and 13,600 units are sold. Sales Cost of goods sold Gross profit (a) 13,600 Units (b) 17,000 Units Produced and Produced and 13,600 Units Sold 13,600 Units Sold
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 variable overhead of $5 per unit. Fixed overhead
is $136,000 per year, and the company estimates sales of 13,600 units at a sales price of $25 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) 13,600 units are produced and 13,600 units are sold and
(b) 17,000 units are produced and 13,600 units are sold.
2. If the company uses variable costing, how much would contribution margin differ if the company produced 17,000 units instead of
producing 13,600? Assume the company sells 13,600 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) 13,600 units are produced and 13,600 units are
sold and (b) 17,000 units are produced and 13,600 units are sold.
Sales
Cost of goods sold
Gross profit
(a) 13,600 Units (b) 17,000 Units
Produced and
13,600 Units Sold
Produced and
13,600 Units Sold
Required 1
Required 2 >
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