Mason Corporation began operations at the beginning of the current year. One of the companys products, a refrigeration element, sells for $185 per unit. Information related to the current years activities follows.

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. (Cost of Finished Goods Inventory)

Compute Masons net income for the current year ended December 31. (Net Income)

If next years production decreases to 23,000 units and general cost behavior patterns do not change, what is the likely effect on:

Variable costs per unit: Direct material Direct labor Manufacturing overhead $ 15 35 46 Annual fixed costs: Manufacturing overhead Selling and administrative $600,000 860,000 Production and sales activity: Production (units) Sales (units) 24,000 20,000 Cost of finished goods inventory Net income Cost of finished goods inventory Net income a. The direct-labor cost of $35 per unit? O 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? O No change Increase Decrease d. The average unit cost of production? O No change Increase Decrease