The Colin Division of Sunland Company sells its product for $32 per unit. Variable costs per unit include: manufacturing, $14; and selling and administrative, $3. Fixed costs are: $200000 manufacturing overhead, and $60000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Edward Lewis, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 40000 units or 60000 units next year. What would the net income be under variable costing for each alternative?
The Colin Division of Sunland Company sells its product for $32 per unit. Variable costs per unit include: manufacturing, $14; and selling and administrative, $3. Fixed costs are: $200000 manufacturing overhead, and $60000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Edward Lewis, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 40000 units or 60000 units next year. What would the net income be under variable costing for each alternative?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...
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The Colin Division of Sunland Company sells its product for $32 per unit. Variable costs per unit include: manufacturing, $14; and selling and administrative, $3. Fixed costs are: $200000 manufacturing overhead, and $60000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Edward Lewis, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 40000 units or 60000 units next year.
What would the net income be under variable costing for each alternative?
40000 units 60000 units
$380000 $340000
$340000 $392000
$340000 $340000
$340000 $500000
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