Answered: The Colin Division of Sunland Company… | bartleby

The Colin Division of Sunland Company sells its product for $32 per unit. Variable costs per unit include: manufacturing, $14; and selling and administrative, $3. Fixed costs are: $200000 manufacturing overhead, and $60000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Edward Lewis, 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 40000 units or 60000 units next year. What would the net income be under variable costing for each alternative?

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Colin Division of Sunland Company sells its product for $32 per unit. Variable costs per unit include: manufacturing, $14; and selling and administrative, $3. Fixed costs are: $200000 manufacturing overhead, and $60000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Edward Lewis, 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 40000 units or 60000 units next year.

What would the net income be under variable costing for each alternative?

40000 units 60000 units

$380000 $340000

$340000 $392000

$340000 $340000

$340000 $500000

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