Swola Company Reports the Following Annual Cost Data for Its

question 173

Multiple Choice

Swola Company reports the following annual cost data for its single product. This product is normally sold for $25 per unit.If Swola increases its production to 200,000 units,while sales remain at the current 75,000 unit level,by how much would the company's income increase or decrease under variable costing?

• A)$187,500 increase.
• B)$112,500 increase.
• C)There will be no change in income.
• D)$112,500 decrease.
• E)$187,500 decrease.

---

Definitions:

FICA Tax

A federal tax in the United States that funds Social Security and Medicare, required to be paid by both employees and employers.

Federal Unemployment Tax

A federal levy paid by employers to fund the unemployment account of the federal government, used to pay unemployment benefits to workers who have lost jobs.

State Unemployment Tax

A tax imposed by state governments on employers to fund unemployment insurance benefits for workers who have lost their jobs.

Social Security Tax

Taxes collected to fund the Social Security program, providing benefits for retirees, the disabled, and survivors of deceased workers.