Information from the Records of the Conundrum Company for September

question 88

Multiple Choice

Information from the records of the Conundrum Company for September 2018 was as follows: $\begin{array} { l r } \text { Sales } & \$ 307,500 \\ \text { Selling and administrative expenses } & 52,500 \\ \text { Direct materials used } & 66,000 \\ \text { Direct labor } & 75,000 \\ \text { Variable factory overhead } & 50,000 \\ \text { Factory overhead } & 51,250 \end{array}$

Inventories
$\begin{array}{lcc}&\text { Sept. 1,2018}&\text { Sept 30,2018 }\\\hline\text { Direct materials } & \$ 8,000 & \$ 10,500 \\\text { Work in process } & 18,750 & 21,000 \\\text { Finished goods } & 17,250 & 14,250\end{array}$ Conundrum Corporation produced 20,000 units.
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

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Definitions:

Factorial Design

An experimental strategy in which factors are varied together to examine their interaction effects on a response variable.

Independent Variables

Variables that are manipulated or changed in an experiment to test their effects on dependent variables.

Dependent Variable

The variable in an experiment that is observed and measured for changes, which are thought to be influenced by the manipulation of the independent variable.

Interaction

In research, this refers to the effect that variables have on each other when combined.