Swisher, Incorporated reports the following annual cost data for its single product: 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 income increase or decrease under variable costing?
A) $60,000 decrease.
B) $90,000 decrease.
C) There is no change in income.
D) $90,000 increase.
E) $60,000 increase.

Question

Swisher, Incorporated reports the following annual cost data for its single product:  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 income increase or decrease under variable costing?
A) $60,000 decrease. 
B) $90,000 decrease. 
C) There is no change in income. 
D) $90,000 increase. 
E) $60,000 increase.

Quizplus · Accepted Answer

There would be no change because fixed costs are expensed in the period in which they are incurred, regardless of the number of units sold.

Swisher, Incorporated Reports the Following Annual Cost Data for Its