Swola Company reports the following annual cost data for its single product. ...
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Accounting
Swola Company reports the following annual cost data for its single product.
Normal production level
75,000
units
Direct materials
$
1.25
per unit
Direct labor
$
2.50
per unit
Variable overhead
$
3.75
per unit
Fixed 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 income increase or decrease under absorption costing?
$112,500 decrease.
$187,500 increase.
$187,500 decrease.
There will be no change in income.
$112,500 increase.
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