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A manufacturer reports direct materials of $5 per unit, direct labor of $2 per unit, and variable
overhead of $3 per unit. Fixed overhead is $160,000 per year, and the company estimates sales
of 16,000 units at a sales price of $22 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) 16,000 units are produced and 16,000 units are sold and (b) 20,000 units are
produced and 16,000 units are sold. 2. If the company uses variable costing, how much would
contribution margin differ if the company produced 20,000 units instead of producing 16,000 ?
Assume the company sells 16,000 units. Hint: Calculations are not required. Complete this
question by entering your answers in the tabs below. If the company uses absorption costing,
compute gross profit assuming (a) 16,000 units are produced and 16,000 units are sold and (b)
20,000 units are produced and 16,000 units are sold.
Complete this question by entering your answers in the tabs below. If the company uses variable
costing, how much would contribution margin differ if the company produced 20,000 units
instead of producing 16,000 ? Assume the company sells 16,000 units. Hint: Calculations are not
required.

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A manufacturer reports direct materials of $5 per unit, direct labor .pdf

  • 1. A manufacturer reports direct materials of $5 per unit, direct labor of $2 per unit, and variable overhead of $3 per unit. Fixed overhead is $160,000 per year, and the company estimates sales of 16,000 units at a sales price of $22 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) 16,000 units are produced and 16,000 units are sold and (b) 20,000 units are produced and 16,000 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 20,000 units instead of producing 16,000 ? Assume the company sells 16,000 units. Hint: Calculations are not required. Complete this question by entering your answers in the tabs below. If the company uses absorption costing, compute gross profit assuming (a) 16,000 units are produced and 16,000 units are sold and (b) 20,000 units are produced and 16,000 units are sold. Complete this question by entering your answers in the tabs below. If the company uses variable costing, how much would contribution margin differ if the company produced 20,000 units instead of producing 16,000 ? Assume the company sells 16,000 units. Hint: Calculations are not required.