Exercise $19-15($Algo$)$ Absorption costing and overproduction LO C$1$

A manufacturer reports direct materials of $$6$ per unit, direct labor of $$3$ per unit, and variable overhead of $$5$ per unit. Fixed overhead

is $$136,000$ per year, and the company estimates sales of $13,600$ units at a sales price of $$25$ per unit for the year. The company has

no beginning finished goods inventory.

If the company uses absorption costing, compute gross profit assuming $($a$)13,600$ units are produced and $13,600$ units are sold and

$($b$)17,000$ units are produced and $13,600$ units are sold.

If the company uses variable costing, how much would contribution margin differ if the company produced $17,000$ units instead of

producing $13,600?$ Assume the company sells $13,600$ units. Hint: Calculations are not required.

Complete this question by entering your answers in the tabs below.

If the company uses absorption costing, compute gross profit assuming $($a$)13,600$ units are produced and $13,600$ units are

sold and $($b$)17,000$ units are produced and $13,600$ units are sold.