Required information Problem 2-40 Financial Statement Elements; Cost Behavior (LO 2-5, 2-6, 2-8) [The following information applies to the questions displayed below.] Mason Corporation began operations at the beginning of the current year. One of the company's products, a refrigeration element, sells for $205 per unit. Information related to the current year's activities follows. $ 15 36 44 Variable costs per unit: Direct material Direct labor Manufacturing overhead Annual fixed costs: Manufacturing overhead Selling and administrative Production and sales activity: Production (units) Sales (units) $600,000 860,000 24,000 2e, eee Mason carries its finished-goods inventory at the average unit cost of production and is subject to a 30 percent income tax rate. There was no work in process at year-end. Problem 2-40 Part 1 Required: 1. Determine the cost of the December 31 finished-goods inventory Cost of finished-goods inventory $ 480,000 Required information Problem 2-40 Financial Statement Elements; Cost Behavior (LO 2-5, 2-6, 2-8) [The following information applies to the questions displayed below.) Mason Corporation began operations at the beginning of the current year. One of the company's products, a refrigeration element, sells for $205 per unit. Information related to the current year's activities follows. $ 15 36 44 Variable costs per unit: Direct material Direct labor Manufacturing overhead Annual fixed costs: Manufacturing overhead Selling and administrative Production and sales activity: Production (units) Sales (units) $600, eee 860, eee 24, eee 20,000 Mason carries its finished-goods inventory at the average unit cost of production and is subject to a 30 percent income tax rate. There was no work in process at year-end. Problem 2-40 Part 2 2. Compute Mason's net income for the current year ended December 31. Net income Required information Problem 2-40 Financial Statement Elements; Cost Behavior (LO 2-5, 2-6, 2-8) [The following information applies to the questions displayed below.) Mason Corporation began operations at the beginning of the current year. One of the company's products, a refrigeration element, sells for $205 per unit. Information related to the current year's activities follows. $ 15 36 44 Variable costs per unit: Direct material Direct labor Manufacturing overhead Annual fixed costs: Manufacturing overhead Selling and administrative Production and sales activity: Production (units) Sales (units) $600,000 860,000 24, eee 20,000 Mason carries its finished-goods inventory at the average unit cost of production and is subject to a 30 percent income tax rate. There was no work in process at year-end Problem 2-40 Part 3 3. If next year's production decreases to 23,000 units and general cost behavior patterns do not change, what is the likely effect on a. The direct-labor cost of $36 per unit? O No change Increase O Decrease Required information a. The direct-labor cost of $36 per unit? No change Increase O Decrease b. The fixed manufacturing overhead cost of $600,000? O No change Increase O Decrease c. The fixed selling and administrative cost of $860,000? O No change O Increase O Decrease d. The average unit cost of production? O No change O Increase O Decrease