Heather, Incorporated Reports the Following Annual Cost Data for Its

question 1

Essay

Heather, Incorporated reports the following annual cost data for its single product:
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 increase current production.

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Definitions:

Recirculating Ball

A type of steering mechanism in vehicles that uses a series of ball bearings to minimize friction and wear in the steering box.

Gearbox

In a steering mechanism, the use of gears to increase the mechanical advantage and decrease driver effort in turning the steering wheel while converting the wheel’s motion into motion that moves the vehicle’s front wheels.

U-joint

A universal joint, a flexible pivot point that transmits power allowing for varying angles of the drive shaft.

Steering Assembly

The collection of components in a vehicle that allows the driver to guide and direct the vehicle in the desired direction.