Mason Corporation began operations at the beginning of the current year. One of the companys products, a refrigeration element, sells for $205 per unit. Information related to the current years activities follows.

Variable costs per unit: Direct material$ 15Direct labor37Manufacturing overhead48Annual fixed costs: Manufacturing overhead$ 600,000Selling and administrative860,000Production and sales activity: Production (units)24,000Sales (units)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.

Required: Multiple Questions

2. Compute Masons net income for the current year ended December 31.

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

1. The direct-labor cost of $37 per unit?

- No change

- Increase

- Decrease

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

- No change

- Increase

- Decrease

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

- No change

- Increase

- Decrease

The average unit cost of production?

- No change

- Increase

- Decrease