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

---

Definitions:

Price Taker

A market participant that accepts the prevailing market price and does not have the power to influence it.

Perfectly Competitive

A market structure characterized by a complete absence of rivalry among the individual firms.

Price Takers

Firms or individuals who accept the market price as given and have no influence to change it due to their small market share.

Market Price

The prevailing rate at which a service or asset is traded in the free market.