Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 59

Multiple Choice

Use the information below to answer the following questions.
Unique Tables manufacture coffee tables made of recycled timber. Market research has suggested that there will be strong demand for the tables. Due to this, management is debating whether to lease a new turning machine to meet increased production. To assist in their decisionmaking, the management accountant has supplied the following information: $\begin{array}{lll}&\text { Without }&\text {With }\\&\text { turning machine }&\text { turning machine }\\\hline\text { Expected level of sales } & 1,500 \text { units } & 1,500 \text { units } \\\text { Sales price per unit } & \$ 150 & \$ 150 \\\text { Variable costs per unit } & \$ 120 & \$ 110 \\\text { Fixed costs } & \$ 7500 & \$ 15,000\end{array}$
-Refer to the table above. The operating gearing for Unique Tables is:

• A)higher with the turning machine.
• B)higher without the turning machine.
• C)insignificant.
• D)equal in both cases.

---

Definitions:

Total Materials Costs

The total expense incurred for materials used in the production of goods, including direct and indirect materials.

Equivalent Units

A concept in costing that converts partially completed goods into a number of completed units, facilitating cost calculation.

Conversion Costs

Costs that are incurred to convert raw materials into finished goods, typically including direct labor and manufacturing overhead.

Work in Process

Refers to the cost of unfinished goods in manufacturing at a specific point in time, including labor, raw materials, and overhead.