Question: Swisher, Incorporated reports the following annual cost data for its single product.
Normal production level 30,000 units
Direct Materials $6.40 per unit
Direct Labor $3.93 per unit
Variable Overhead $5.80 per unit
Fixed Overhead $150,000 in total
This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's contribution margin increase or decrease under variable costing?
- $60,000 decrease
- $90,000 decrease
- no change
- $90,000 increase
- $60,000 increase