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 companys products, a refrigeration element, sells for $185 per unit. Information related to the current years activities follows.

Variable costs per unit:
Direct material	$	10
Direct labor		35
Manufacturing overhead		46
Annual fixed costs:
Manufacturing overhead	$	600,000
Selling and administrative		860,000
Production and sales activity:
Production (units)		24,000
Sales (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.

3. If next years 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 $35 per unit?

No changeIncreaseDecrease

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

No changeIncreaseDecrease

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

No changeIncreaseDecrease

d. The average unit cost of production?

No changeIncreaseDecrease