Question

Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units. If an amount is zero, enter "0". a. How much would absorption costing income from operations differ between a plan to produce 10,000 units and a plan to produce 15,000 units? $ b. How much would variable costing income from operations differ between the two production plans? $

Answer 1

Answer:

A) 10,000=15.75 dollars per unit

15,000= 10.5 dollars per unit.

B) 10,000=1,260,000 in variable costs

15,000=1,875,000 in variable costs

Explanation:

In order to calculate the first one you just have to divide the fixed costs, which are operations and administrative charges on the production of the products, by the number of units made, which would be:

157,500/10,000= 15.75

157,500/15,000=10.5

And to calculate the difference between variable costing, you just have to multiply the cost of each unit by the number of units to be produced:

126x10,000=1,260,000

126x15,000=1,875,000