XIAN Manufacturing Produces a Unique Valve, and Has the Capacity

question 150

Multiple Choice

XIAN Manufacturing produces a unique valve, and has the capacity to produce 50,000 valves annually. Currently XIAN produces 40,000 valves and is thinking about increasing production to 45,000 valves next year. What is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change?

• A)Total manufacturing costs will increase and unit manufacturing costs will stay the same.
• B)Total manufacturing costs will increase and unit manufacturing costs will decrease.
• C)Total manufacturing costs will stay the same and unit manufacturing costs will stay the same.
• D)Total manufacturing costs will stay the same and unit manufacturing costs will decrease.

---

Definitions:

Cash Disbursements

Payments made by a business in the form of cash or cash equivalents.

December

The last month of the year according to the Gregorian calendar, which is the twelfth one.

Merchandise

Goods that are purchased in finished form for the purpose of resale without further processing.

Cash Balance

The total amount of cash in a company's accounts at any given time.