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 $156,000 per year, and the company estimates sales of 15,600 units at a sales price of $26 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) 15,600 units are produced and 15,600 units are sold and (b) 19,500 units are produced and 15,600 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 19,500 units instead of producing 15,600? Assume the company sells 15,600 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) 15,600 units are produced and 15,600 units are sold and (b) 19,500 units are produced and 15,600 units are sold. (a) 15,600 Units Produced and 15,600 Units Sold (b) 19,500 Units Produced and 15,600 Units Sold Sales Cost of goods sold Gross profit
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 $156,000 per year, and the company estimates sales of 15,600 units at a sales price of $26 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) 15,600 units are produced and 15,600 units are sold and (b) 19,500 units are produced and 15,600 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 19,500 units instead of producing 15,600? Assume the company sells 15,600 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) 15,600 units are produced and 15,600 units are sold and (b) 19,500 units are produced and 15,600 units are sold. (a) 15,600 Units Produced and 15,600 Units Sold (b) 19,500 Units Produced and 15,600 Units Sold Sales Cost of goods sold Gross profit
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 $156,000 per year, and the company estimates sales of 15,600 units at a sales price of $26 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) 15,600 units are produced and 15,600 units are sold and
(b) 19,500 units are produced and 15,600 units are sold.
2. If the company uses variable costing, how much would contribution margin differ if the company produced 19,500 units instead of
producing 15,600? Assume the company sells 15,600 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) 15,600 units are produced and 15,600 units are
sold and (b) 19,500 units are produced and 15,600 units are sold.
(a) 15,600 Units
Produced and
15,600 Units Sold
(b) 19,500 Units
Produced and
15,600 Units Sold
Sales
Cost of goods sold
Gross profit
<Required 1
Required 2 >
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