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Author Question: Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, ... (Read 98 times)

mcmcdaniel

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on: Mar 6, 2021
Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018:

20172018
Units of XT15 produced and sold52,00054,000
Selling price$600$670
Direct materials (square feet)153,000156,750
Direct materials costs per square foot$53$61
Manufacturing capacity in units of XT1564,00064,000
Total conversion costs$6,400,000$6,784,000
Conversion costs per unit of capacity$100$106
Selling and customer-service capacity (customers)190190
Total selling and customer-service costs$2,926,000$3,054,250
Selling and customer-service capacity cost per customer$15,400$16,075

Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Izzy's Limited had 175 customers in 2017 and 180 customers in 2018.

What is the revenue effect of the growth component?
◦ $3,780,000 F
◦ $1,200,000  U
◦ $3,780,000  U
◦ $1,200,000  F
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by mcmcdaniel on Mar 6, 2021

cassie_ragen

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Reply #1 on: Mar 6, 2021
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mcmcdaniel

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Reply 2 on: Mar 6, 2021
Excellent

nanny

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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