Author Question: Foley Products Company makes a household appliance with model number X500. The goal for 2018 is to ... (Read 73 times)

Wadzanai · **on:** Mar 6, 2021

Foley Products Company makes a household appliance with model number X500. The goal for 2018 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of X500 units that can be produced. The industry market size for appliances increased 10% from 2017 to 2018. The following additional data are available for 2017 and 2018:

2017

2018

Units of X500 produced and sold

13,000

14,300

Selling price

$125

$120

Direct materials (square feet)

38,000

36,800

Direct material costs per square foot

$14

$16

Manufacturing capacity for X500 (units)

12,000

11,300

Total conversion costs

$252,000

$237,300

Conversion costs per unit of capacity

$21

What is operating income for 2018?
◦ $1,716,000
◦ $1,127,200
◦ $889,900
◦ $875,200

Dominic · **Reply #1 on:** Mar 6, 2021

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