Ellis Corporation The following information was extracted from the first year absorption-based accounting records of Ellis Corporation

Total fixed costs incurred $100,000

Total variable costs incurred 50,000

Total period costs incurred 70,000

Total variable period costs incurred 30,000

Units produced 20,000

Units sold 12,000

Unit sales price $12

Refer to Ellis Corporation.Based on variable costing,if Ellis had sold 12,001 units instead of 12,000,its income before income taxes would have been A)$9.50 higher. B)$11.00 higher. C)$8.50 higher. D)$8.33 higher.

Question

Ellis Corporation The following information was extracted from the first year absorption-based accounting records of Ellis Corporation

Total fixed costs incurred	$100,000
Total variable costs incurred	50,000
Total period costs incurred	70,000
Total variable period costs incurred	30,000
Units produced	20,000
Units sold	12,000
Unit sales price	$12

Refer to Ellis Corporation.Based on variable costing,if Ellis had sold 12,001 units instead of 12,000,its income before income taxes would have been A)$9.50 higher. B)$11.00 higher. C)$8.50 higher. D)$8.33 higher.

Quizplus · Accepted Answer

Based on variable costing, the incremental contribution margin per unit is $17.50 ($47.50 - $30). Therefore, if Ellis had sold one additional unit, its income before income taxes would increase by $17.50. Therefore, if Ellis had sold 12,001 units instead of 12,000, its income before income taxes would have been $8.50 higher.

Ellis Corporation The Following Information Was Extracted from the First Year Absorption-Based