Dumpling Makers Co., (DMC), uses variable costing for managerial purposes and absorption costing for external reporting. These past two months, DMC has had an even number of sales at $70,000, at a price of $35/unit. However, in an effort to reduce the risk of stock-outs, management increased production from the regular 2,000 units to 3,000 units for last month only. DMC has fixed costs of $15,000 per month.
If absorption net income was $25,000 last month, what will it be this month (assuming that sales continue to hold constant and production returns to normal levels)? (Round per-unit costs to the nearest cent.)

Question

Dumpling Makers Co., (DMC), uses variable costing for managerial purposes and absorption costing for external reporting. These past two months, DMC has had an even number of sales at $70,000, at a price of $35/unit. However, in an effort to reduce the risk of stock-outs, management increased production from the regular 2,000 units to 3,000 units for last month only. DMC has fixed costs of $15,000 per month. 
If absorption net income was $25,000 last month, what will it be this month (assuming that sales continue to hold constant and production returns to normal levels)? (Round per-unit costs to the nearest cent.)

Quizplus · Accepted Answer

The Answer of Dumpling Makers Co., (DMC), uses variable costing for managerial purposes and absorption costing for external reporting. These past two months, DMC has had an even number of sales at $70,000, at a price of $35/unit. However, in an effort to reduce the risk of stock-outs, management increased production from the regular 2,000 units to 3,000 units for last month only. DMC has fixed costs of $15,000 per month. 
If absorption net income was $25,000 last month, what will it be this month (assuming that sales continue to hold constant and production returns to normal levels)? (Round per-unit costs to the nearest cent.)