179.Heather, Incorporated reports the following annual cost data for its single product:
Direct materials$9.00 per unit
Direct labor$6.50 per unit
Variable overhead$11.00 per unit
Fixed overhead$720,000 in total
This product is normally sold for $56 per unit. If Heather increases its production to 80,000 units while sales remain at the current 60,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing? Assume the company has idle capacity to double current production.
180.Dataport Company reports the following annual cost data for its single product:
Normal production and sales level89,000 units
Direct materials$14.00 per unit
Direct labor$21.00 per unit
Variable overhead$27.00 per unit
Fixed overhead$3,738,000 in total
This product is normally sold for $230 per unit. If Dataport increases its production to 100,000 units, while sales remain at the current 89,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing? Assume the company has idle capacity to double current production.
181.Assume that the following information is available for Coldwrap, Inc.:
Light-weight Down ComforterMedium-weight Down ComforterHeavy-weight Down Comforter
Sales$525,000$262,500$660,000
Variable expenses
Variable production$105,000$28,875$135,000
Variable advertising$15,750$5,250$33,000
Variable shipping $18,000 $21,000 $42,000
Compute contribution margin ratio for each product line.
182.Anchovy, Inc., a producer of frozen pizzas, began operations this year. During this year, the company produced 16,000 cases of pizza and sold 15,000. At year-end, the company reported the following income statement using absorption costing:
Sales (15,000 × $48)$720,000
Cost of goods sold (15,000 × $19) 285,000
Gross margin$435,000
Selling and administrative expenses 79,000
Net income$356,000
Production costs per case total $19, which consists of $15.50 in variable production costs and $3.50 in fixed production costs (based on the 16,000 units produced). Eight percent of total selling and administrative expenses are variable. Compute net income under variable costing.
183.Toth, Inc. had net income of $950,000 based on variable costing. Beginning and ending inventories were 60,000 units and 56,000 units, respectively. Assume the fixed overhead cost per unit was $.85 for both the beginning and ending inventory. What is net income under absorption costing?
184.Fanelli Company had net income of $678,000 based on variable costing. Beginning and ending inventories were 5,000 units and 4,200 units, respectively. Assume the fixed overhead cost per unit was $.50 for both the beginning and ending inventory. What is net income under absorption costing?