Use the Following Information for Items
the Colin Division $\quad$

question 4

Short Answer

Use the following information for items
The Colin Division of Mochrie Company sells its product for $30 per unit.Variable costs per unit are: manufacturing, $12; and selling and administrative, $2.Fixed costs are: $200,000 manufacturing overhead, and $50,000 selling and administrative.There was no beginning inventory.Expected sales for next year are 40,000 units.Ryan Stiles, the manager of the Colin Division, is under pressure to improve the performance of the Division.As he plans for next year, he has to decide whether to produce 40,000 units or 50,000 units.
-What would the manufacturing cost per unit be under absorption costing for each alternative? $\quad$$\quad$$\quad$$\underline{40,000 \text { units }} \quad \underline{50,000 \text { units }}$
a) $\quad$$\quad$$\quad$$\quad$ $12.00 $\quad$$\quad$$\quad$ $12.00
b) $\quad$$\quad$$\quad$$\quad$ $14.00 $\quad$$\quad$$\quad$ $14.00
c) $\quad$$\quad$$\quad$$\quad$ $16.00 $\quad$$\quad$$\quad$ $17.00
d) $\quad$$\quad$$\quad$$\quad$ $17.00 $\quad$$\quad$$\quad$ $16.00

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Definitions:

Annual Sales

The total revenue a company generates from its operations over the course of a year.

Cash Expenses

Cash expenses are expenditures that a business or individual pays out in cash during a specified period, as opposed to non-cash expenses such as depreciation.

Planetary Gearset

A planetary gearset is a compact and efficient gear system used in transmissions, consisting of one central "sun" gear, multiple "planet" gears that orbit the sun gear, and a "ring" gear encompassing the planet gears.