Heather,Incorporated Reports the Following Annual Cost Data for Its Single

question 59

Essay

Heather,Incorporated reports the following annual cost data for its single product:
$\begin{array}{ll}\text { Normal production and sales level } & 60,000 \text { units } \\\text { Direct materials } & \$ 9.00 \text { per unit } \\\text { Direct labor } & \$ 6.50 \text { per unit } \\\text { Variable overhead } & \$ 11.00 \text { per unit } \\\text { Fixed overhead } & \$ 720,000 \text { in total }\end{array}$

This product is normally sold for $56 per unit.If Heather increases its production to 80,000 units while sales remain at the current 60,000 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:

Environmental Audit

An evaluation process that systematically inspects an organization's environmental impact, compliance with environmental regulations, and practices to manage and improve environmental performance.

Political Strategy

A plan of action designed to achieve a specific political outcome, often used by politicians, governments, and organizations to influence public policy or opinion.

Bribing

The act of offering, giving, receiving, or soliciting something of value as a means of influence or persuasion, typically in an illegal or unethical manner.

Cattle Ranching Industry

An agricultural sector that specializes in raising cattle for beef production or for their byproducts, operating within a range of scales from small farms to large commercial operations.