Reference no: EM133975711

Problem

Balerio Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.80 Direct labor $ 3.20 Variable manufacturing overhead $ 1.60 Fixed manufacturing overhead $ 10.50 Fixed selling expense $ 1.25 Fixed administrative expense $ 1.80 Sales commissions $ 1.50 Variable administrative expense $4,500 If the number of units Balerio produces is more than 11,000 (outside its relevant range) Total fixed manufacturing overhead cost is $175,000, Total fixed selling expenses is $10,000 and fixed administrative expenses was $9,500. Balerio believes that it can currently sell 12,000 units this year up from the 9,000 units it produced last year. Get the instant assignment help. If the per-unit selling price is $36.00. Which unit production level (9,000 units or 12,000 units) creates the higher net income (lower net loss) for Balerio? What is the net income if Balerio sells 14,000 units?