Answer:
Cost of goods sold:
- 72,000 units = $3,174,000
- 104,000 units = $4,118,000
Cost of goods sold per unit:
- 72,000 units = $44.08
- 104,000 units = $39.60
A comparative income statement showing the different production and sales levels:
70,000 units 72,000 units 104,000 units
Total sales $3,990,000 $4,104,000 $5,928,000
<u>COGS ($3,115,000) ($3,174,000) ($4,118,000) </u>
Gross profit $875,000 $930,000 $1,810,000
If Jacquie increases its production to 104000 units, while sales remain at the current 72000 unit level, by how much would the company?
Total sales $4,104,000
<u>COGS ($2,851,200)</u>
Gross profit $1,253,000
If the production level is 104,000 units, but only 72,000 are sold, net profits will increase by $323,000 (= $1,253,000 - $930,000). The remaining 32,000 units will be reported as ending inventory of finished goods.
Explanation:
normal production 72,000 units 104,000 units
direct materials $700,000 $720,000 $1,040,000
direct labor $525,000 $540,000 $780,000
variable overhead $840,000 $864,000 $1,248,000
fixed overhead $1,050,000 $1,050,000 $1,050,000
<u>total $3,115,000 $3,174,000 $4,118,000</u>
cost per unit $44.50 $44.08 $39.60
