Question

Variable manufacturing costs are $150 per unit, and fixed manufacturing costs are $75,000. Sales are estimated to be 6,000 units. How much would variable costing operating income differ between a plan to produce 6,000 units and a plan to produce 7,500 units? a.$225,000 b.$15,000 c.$18,750 d.No difference

Answer 1

Answer: $225,000

Step-by-step explanation:

From the information given:

Variable manufacturing costs = $150 per unit

Fixed manufacturing costs = $75,000

Estimated Sales = 6,000 units

Income under variable costing operating income will then differ by:

= (7500-6000) × $150

= 1500 × $150

= $225,000