Walker Boat Company produces bass boats. The following comments were found in the “Management’s Discussion and...

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Accounting

Walker Boat Company produces bass boats. The followingcomments were found in the “Management’s Discussion and Analysis”section of the annual reports.
“Bass boat production includes a significant amount ofrobotic manufacturing costs, which do not vary with productionlevels.”
a. What effect would the change in level of boatsproduced have on the total robotic costs?
b. What effect would the change in level of boatsproduced have on the unit costs of the boats?
c. From the external reporting point of view, how wouldyour answer to (b) possibly lead to unethical behavior bymanagement anxious to produce a better bottom-line this period?(Not that Cost of Goods Sold, an expense item on the IncomeStatement, is a function of units SOLD, not produced).

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In this case boss boat productions are having significant manufacturing cost which do not vary with production level We can call them as fixed cost as well Assuming that most of the production cost See Answer

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Walker Boat Company produces bass boats. The followingcomments were found in the “Management’s Discussion and Analysis”section of the annual reports.“Bass boat production includes a significant amount ofrobotic manufacturing costs, which do not vary with productionlevels.”a. What effect would the change in level of boatsproduced have on the total robotic costs?b. What effect would the change in level of boatsproduced have on the unit costs of the boats?c. From the external reporting point of view, how wouldyour answer to (b) possibly lead to unethical behavior bymanagement anxious to produce a better bottom-line this period?(Not that Cost of Goods Sold, an expense item on the IncomeStatement, is a function of units SOLD, not produced).