Dataport Company Reports the Following Annual Cost Data for Its

question 16

Essay

Dataport Company reports the following annual cost data for its single product:
$\begin{array}{ll}\text { Normal production and saleslevel } & 89,000 \text { units } \\\text { Direct materials } & \$ 14.00 \text { per unit } \\\text { Direct labor } & \$ 21.00 \text { per unit } \\\text { Variable overhead } & \$ 27.00 \text { per unit } \\\text { Fixed overhead } & \$ 3,738,000 \text { in total }\end{array}$ This product is normally sold for $230 per unit.If Dataport increases its production to 100,000 units, while sales remain at the current 89,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing? Assume the company has idle capacity to double current production.

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Definitions:

Unemployment

A situation where individuals who are capable of working and are actively seeking work are unable to find employment.

Inflation

A universal hike in costs and decline in the monetary value.

Long-Run Phillips Curve

An economic concept stating that in the long run, there is no trade-off between inflation and unemployment, depicted as a vertical line at the natural rate of unemployment.

Fiscal Policy

Fiscal policy involves government spending and taxation to influence the economy.