Figure 2-12 Information from the records of the Scully Company for July 2011 was as follows:
Scully Corporation produced 20,000 units.
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Refer to Figure 2-12.If production increased to 32,000 units next year, what is the effect on variable product costs per unit and total product costs per unit respectively?
A) remain the same; decrease
B) remain the same; remain the same
C) increase; remain the same
D) decrease; increase

Question

Figure 2-12 Information from the records of the Scully Company for July 2011 was as follows:
  Scully Corporation produced 20,000 units.
-
Refer to Figure 2-12.If production increased to 32,000 units next year, what is the effect on variable product costs per unit and total product costs per unit respectively?
A) remain the same; decrease 
B) remain the same; remain the same 
C) increase; remain the same 
D) decrease; increase

Quizplus · Accepted Answer

Variable product costs per unit remain the same because they are constant per unit. Total product costs per unit decrease because fixed costs are spread over more units.

Figure 2-12 Information from the Records of the Scully Company