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Determine the cost of the December 31 finished-goods inventory. 2. Compute Mason’s net income for the current year ended December 31. 3. If next year’s production decreases to 23,000 units and general cost behavior patterns do not change, what is the likely effect on   a. The direct-labor cost of $36 per unit? No change Increase Decrease b. The fixed manufacturing overhead cost of $600,000? No change Increase Decrease

Determine the cost of the December 31 finished-goods inventory. 2. Compute Mason’s net income for the current year ended December 31. 3. If next year’s production decreases to 23,000 units and general cost behavior patterns do not change, what is the likely effect on   a. The direct-labor cost of $36 per unit? No change Increase Decrease b. The fixed manufacturing overhead cost of $600,000? No change Increase Decrease

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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1. Determine the cost of the December 31 finished-goods inventory.

2. Compute Mason’s net income for the current year ended December 31.

3. If next year’s production decreases to 23,000 units and general cost behavior patterns do not change, what is the likely effect on
 
a. The direct-labor cost of $36 per unit?

  • No change
  • Increase
  • Decrease

b. The fixed manufacturing overhead cost of $600,000?

  • No change
  • Increase
  • Decrease

c. The fixed selling and administrative cost of $860,000?

  • No change
  • Increase
  • Decrease

d. The average unit cost of production?

  • No change
  • Increase
  • Decrease

 

Required information [The following information applies to the questions displayed below.] Mason Corporation began operations at the beginning of the current year. One of the company's products, a refrigeration element, sells for $195 per unit. Information related to the current year's activities follows. Variable costs per unit: Direct material $ 15 Direct labor 36 Manufacturing overhead Annual fixed costs: 46 Manufacturing overhead Selling and administrative Production and sales activity: Production (units) Sales (units) $600,000 860,000 24,000 20,000 Mason carries its finished-goods inventory at the average unit cost of production and is subject to a 30 percent income tax rate. There was no work in process at year-end.
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Mason Corporation began operations at the beginning of the current year. One of the company's products, a refrigeration element, sells for $195 per unit. Information related to the current year's activities follows. Variable costs per unit: Direct material $ 15 Direct labor 36 Manufacturing overhead Annual fixed costs: 46 Manufacturing overhead Selling and administrative Production and sales activity: Production (units) Sales (units) $600,000 860,000 24,000 20,000 Mason carries its finished-goods inventory at the average unit cost of production and is subject to a 30 percent income tax rate. There was no work in process at year-end.
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