Jax Incorporated reports the following data for its only product. The company had no beginning finished goods inventory and it uses absorption costing. Sales price $ 56.20 per unit Direct materials $ 9.20 per unit Direct labor $ 6.70 per unit Variable overhead $ 11.20 per unit Fixed overhead $ 781,200 per year 1. Compute gross profit assuming (a) 62,000 units are produced and 62,000 units are sold and (b) 84,000 units are produced and 62,000 units are sold. 2. By how much would the company’s gross profit increase or decrease from producing 22,000 more units than it sells?
Jax Incorporated reports the following data for its only product. The company had no beginning finished goods inventory and it uses absorption costing. Sales price $ 56.20 per unit Direct materials $ 9.20 per unit Direct labor $ 6.70 per unit Variable overhead $ 11.20 per unit Fixed overhead $ 781,200 per year 1. Compute gross profit assuming (a) 62,000 units are produced and 62,000 units are sold and (b) 84,000 units are produced and 62,000 units are sold. 2. By how much would the company’s gross profit increase or decrease from producing 22,000 more units than it sells?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 18E
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Question
Jax Incorporated reports the following data for its only product. The company had no beginning finished goods inventory and it uses absorption costing.
| Sales price | $ 56.20 | per unit |
|---|---|---|
| Direct materials | $ 9.20 | per unit |
| Direct labor | $ 6.70 | per unit |
| Variable overhead | $ 11.20 | per unit |
| Fixed overhead | $ 781,200 | per year |
1. Compute gross profit assuming (a) 62,000 units are produced and 62,000 units are sold and (b) 84,000 units are produced and 62,000 units are sold.
2. By how much would the company’s gross profit increase or decrease from producing 22,000 more units than it sells?
Transcribed Image Text:Required 1 Required 2
By how much would the company's gross profit increase or decrease from producing 22,000 more units than it sells?
Gross profit
increases
by
Transcribed Image Text:Compute gross profit assuming (a) 62,000 units are produced and 62,000 units are sold and (b) 84,000 units are produced
and 62,000 units are sold.
Sales
Cost of goods sold
Gross profit
(a) 62,000 Units
Produced and 62,000
Units Sold
$
3,484,400
(b) 84,000 Units
Produced and 62,000
Units Sold
$
3,484,400
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