Information from the Records of the Scully Company for July

question 138

Multiple Choice

Information from the records of the Scully Company for July was as follows:
$\begin{array}{llr} \text { Sales } &\$307,500\\ \text { Selling and administrative expenses } &52,500\\ \text {Direct materials used } &66,000\\ \text { Direct labour } &75,000\\ \text { Variable factory overhead} &50,000\\ \text {Factory overhead } &51,250\\\end{array}$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Inventories }$
$\begin{array}{lrr}&\text {July 1}&\text {July 31}\\\text { Direct materials } & \$ 8,000 & \$ 10,500 \\\text { Work in process } & 18,750 & 21,000 \\\text { Finished goods } & 17,250 & 14,250\end{array}$
Scully Corporation produced 20,000 units.
-Refer to the figure.If production increases to 32,000 units next year,what will be the effect on variable product costs per unit and total product costs per unit,respectively?

• A)remain the same; decrease
• B)remain the same; remain the same
• C)increase; remain the same
• D)decrease; increase

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Definitions:

Units Sold

The total number of product units that have been sold during a specific period.

Franchise

A business model that allows individuals or entities to operate a business under an established brand and business system in exchange for fees and adherence to certain standards.

Equipment

Tangible property used in operations, such as machinery or computers, that has a useful life beyond a single reporting period.

Depreciation

The process of allocating the cost of a tangible asset over its useful life.