How many units did Pharoah produce last year?

How many units did Pharoah produce last year based on the given data?

The information provided states that Pharoah sold 20,500 units last year. To determine how many units Pharoah produced, we need to consider the difference in net income and unit production costs under variable and absorption costing.

Calculating the Number of Units Produced

Under variable costing, the unit production cost is $8 and the net income was $10,800. Meanwhile, under absorption costing, the unit production cost is $11 and the net income was $13,800.

The difference in net income between the two costing methods can be calculated as follows:

Difference in unit production costs: $11 - $8 = $3

Difference in net income: $13,800 - $10,800 = $3,000

Dividing the difference in net income by the difference in unit production costs:

Number of units produced: $3,000 / $3 = 1,000 units

Therefore, based on the given data, Pharoah produced 1,000 units last year.

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