Textra Plastics Textra Plastics Textra Plastics Textra Plastics Quick Study 19-8

Question

Textra Plastics Textra Plastics Textra Plastics Textra Plastics Quick Study 19-8 Production level, variable costing, gross margin LO Ramort Company reports the following cost data for its single product. The company regularly sells 20,0 units of its product at a price of $60 per unit. If Ramort doubles its production to 40,000 units while sal remain at the current 20,000-unit level, by how much would the company's contribution margin increase decrease under variable costing? Direct materials Direct labor Overhead costs for the year S10 per unit $ 12 per unit $3 per unit Variable overhead Fixed overhead per year Variable 40,000 Selling and adminstrative costs for the year Normal production level (in units) Would the income be different if using variable costing instead of absorption costing? $2 per unit Fixed 65,200 20,000 units RAMORT COMPANY Variable Costing Income Statement (Partial)- 20,000 20,000 Production volume (units) Sales volume (units) 40,000 20,000 Sales Direct materials Direct labor Variable overhead Selling and administrative Contribution margin Under variable costing, can a company increase its net income by increasing production?

Explanation / Answer

Ramort Company Variable costing Income Statement (partial) product volume (units) 20,000 40,000 Sales voume (units) 20,000 20,000 Sales 1200000 1200000 less Variable cost Direct materials 200,000 200,000 Direct labor 240,000 240,000 Variable overhead 60,000 60,000 Selling and administrative 40,000 40,000 total variable expense 540,000 540,000 Contribution margin 660,000 660,000 Under Variable costing can a company increasse its net income by increaseing Yes production this is because fixed costs remain same in total hence with increase in production net income will increase

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.