(SOLVED) Refer to the information about Ramort Company in QS 19 5


Question Description:

$19

Refer to the information about Ramort Company in QS 19-5. If Ramort doubles its production to 40.000 units while sales remain at the current 20.000-unit level, by how much would the company’s gross margin Increase or decrease under absorption costing?
Direct materials…………………………….. $ 10 per unit
Direct labor………………………………… $ 12 per unit
Overhead costs for the year
Variable overhead………………………….. $3 per unit
Fixed overhead per year…………………… $40,000
Selling and administrative costs for the year
Variable……………………………………… $2 per unit
Fixed………………………………………… $65,200
Normal production level (in units)………… 20,000 units

Answer

$19