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EMERGENCY answer needed in next 30 min thank you!! Break Even Corp has the following...

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Question

Accounting

EMERGENCY answer needed in next 30 min thank you!!

Break Even Corp has the following info:

2020

2021

Beginning Inventory (in units)

20

10

Actual Sales (in units)

400

405

Budgeted production (in units)

400

410

Budgeted fixed manufacturing costs (in $)

8,000

8,610

Operating Income using Variable Costing (in $)

$ 0

$ 0

In 2020, budgeted manufacturing costs were $55.00 per unit ($35.00 variable and $20.00 fixed costs).

In both years, budgeted fixed manufacturing costs = actual fixed manufacturing costs, and budgeted variable costs per unit = actual variable costs per unit.

Required (each of these are separate situations):

  1. What is net income (loss) using absorption costing for 2021
  2. How much more (less) net income would be generated based on Absorption Costing if one additional unit was produced in 2021. Sales for 2021 remain at 405 units
  3. Why would the production manager want to produce extra units if Absorption Costing was used in 2021, even if it is likely that the additional units will be excess of market demand and will never be sold.

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