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19.12

Jacquie Inc. reports the following annual cost data for its single product. Normal production and sales level 60,000 units Sa

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Answer #1

Solution:

Fixed Overhead cost per unit if 80000 units are produced = $720000/ 80000 = $9 per unit

Fixed overhead cost deferred in ending inventory = (80000 units - 60000 units) * $9 = $180,000

Therefore, due to fixed overhead deferred, Gross margin would increase by $180,000.

Hence,

Increase in Gross Margin under absorption costing = $180,000 Increase

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