Xi Manufacturing,which Began Operations on January 1 of the Current

question 7

Essay

Xi Manufacturing,which began operations on January 1 of the current year,produces an industrial scraper that sells for $325 per unit.Information related to the current year's activities follows.
A.Compute the company's average unit cost of production.
B.Determine the cost of the December 31 finished-goods inventory.
C.Compute the company's cost of goods sold.
D.1.No change.Direct labor is a variable cost,and the cost per unit will remain constant.
2.No change.Despite the increase in the number of units produced,this is a fixed cost,which remains the same in total.
D.If next year's production increases to 23,000 units and general cost behavior patterns do not change,what is the likely effect on:
1.The direct-labor cost of $35 per unit? Why?
2.The fixed manufacturing overhead cost of $400,000? Why?

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Definitions:

Commercial Unit

A term used in sales law referring to a standard or unit of goods that is regarded as a single whole for purposes of sale and division.

Accept Goods

The act of receiving or taking delivery of goods in a manner that conforms with the terms of a contract.

Nonconformity

A deviation or failure to meet specified standards, often relating to quality or performance in products or services.

Replace Defective

The process of substituting goods or services that are flawed or do not meet the contractual specifications.