Swola Company reports the following annual cost data for its single product.

Normal production level75,000 unitsDirect materials$1.25 per unitDirect labor$2.50 per unitVariable overhead$3.75 per unitFixed overhead$300,000 in total

This product is normally sold for $25 per unit. If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing?

Answer rating: 100% (QA)

Normal production level 75000 units Direct materials cost per unit 125 Direct labor cost per unit 250 Variable overhead cost per unit 375 Fixed overhead 300000 remains the same regardless of production level Selling price per unit 25 ... View the full answer