XIAN Manufacturing Produces a Unique Valve,and Has the Capacity to Produce

question 223

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 increase and unit manufacturing costs will also increase.

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Definitions:

Accounts Receivable

This term refers to the money that is owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Credit Sales

Sales made by a business where payment is delayed, allowing the buyer to purchase goods or services on credit.

Month of Sale

The specific month in which a sale transaction was completed or recognized for accounting or reporting purposes.

Collections

Collections refer to the process of pursuing payments of debts owed by individuals or businesses, often conducted by dedicated departments or external agencies.