Swisher, Incorporated Reports the Following Annual Cost Data for Its

question 70

Multiple Choice

Swisher, Incorporated reports the following annual cost data for its single product.
$$\begin{array} { l l } \text { Normal production level } & 30,000 \text { units } \\\text { Direct materials } & \$ 6.40 \text { per unit } \\\text { Direct labor } & \$ 3.93 \text { per unit } \\\text { Variable overhead } & \$ 5.80 \text { per unit } \\\text { Fixed overhead } & \$ 150,000 \text { in total }\end{array}$$
This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing?

• A) $60,000 decrease.
• B) $90,000 decrease.
• C) There is no change in gross margin.
• D) $90,000 increase.
• E) $60,000 increase.

---

Definitions:

Managerial Roles

Specific categories of behavior that managers are expected to perform, including interpersonal, informational, and decisional roles.

Katz

Refers to Daniel Katz, an American social psychologist known for his work on organizational psychology, including studies on motivation, leadership, and attitude change.

Managerial Skill

The ability to make business decisions and lead subordinates within a company to meet the organization's objectives.

Leading

The act of guiding, directing, and motivating individuals or teams to achieve organizational goals.