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Temka [501]
3 years ago
15

Swisher, Incorporated reports the following annual cost data for its single product: Normal production level 30,000 units Direct

materials $ 6.40 per unit Direct labor $ 3.93 per unit Variable overhead $ 5.80 per unit Fixed overhead $ 150,000 in total This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's income increase or decrease under absorption costing?
Business
1 answer:
wlad13 [49]3 years ago
4 0

Answer:

Profit decreases by $322,600

Explanation:

Normal production level = 30,000 units

Cost of direct material per unit =$6.40 , total cost = $6.40*30,000=$192,000

Cost of direct labor per unit =$3.93 , total cost =$3.93*30,000=$117,900

Variable over head cost per unit=$5.80, total cost =$5.80*30,000=$174000

Fixed overhead total cost = $150,000

Production cost with 30,000 units will be;

$192,000 + $117,900 + $174000 + $150,000 =$633900

Normal selling price of product  per unit = $48

Revenue after normal sell of 30,000 units $48 = 30,000*48=$1440000

Profit obtained : $806,100

Increasing the production to 50,000 units you can calculate the projected cost of production

New production level = 50,000 units

Cost of direct material per unit =$6.40 , total cost = $6.40*50,000=$320,000

Cost of direct labor per unit =$3.93 , total cost =$3.93*50,000=$196,500

Variable over head cost per unit=$5.80, total cost =$5.80*50,000=$290,000

Fixed overhead total cost = $150,000

Production cost with 30,000 units will be;

$320,000 + $196,500 + $290,000 + $150,000 =$956,500

Normal selling price of product  per unit = $48

Revenue after normal sell of 30,000 units $48 = 30,000*48=$1440000

Profit obtained =$483,500

Decreased in profit = $806100-$483500 =$322,600

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3 years ago
Suppose that when Sue’s disposable income is $10,000, she spends $8,000, and when her disposable income is $20,000, she spends $
soldier1979 [14.2K]

Answer:

The correct answer is: 2,000; 0.4

Explanation:

We can write the initial consumption function as,

C = a + bY

8,000 = a + 10,000b

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The new consumption function is,

14,000 = a + 20,000b

Putting value of a in this function

14,000 = 8,000 - 10,000b + 20,000b

14,000 - 8,000 = 10,000b

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b = 0.6

Putting the value of b in the initial function,

8,000 = a + 10,000 \times0.6

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The marginal propensity to consume or b is 0.6.

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7 0
3 years ago
Examine the four different companies in the table, which shows their yearly
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1 year ago
1. Describe the four management functions and the type of management activity associated with each.
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Explanation:

8 0
3 years ago
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Nastasia [14]

Answer:

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