Figure 2-12
Information from the records of the Conundrum Company for September 2016 was as follows:
Inventories
Conundrum 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; remain the same
B) remain the same; decrease
C) increase; remain the same
D) decrease; increase

Question

Figure 2-12
Information from the records of the Conundrum Company for September 2016 was as follows:
  Inventories
  Conundrum 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; remain the same 
B) remain the same; decrease 
C) increase; remain the same 
D) decrease; increase

Quizplus · Accepted Answer

Variable costs per unit remain the same as they are constant per unit, while total product costs per unit decrease as fixed costs are spread over more units.

Figure 2-12 Information from the Records of the Conundrum Company for September