Author Question: Trusted Products Company makes a household appliance with model number L800. The goal for 2018 is to ... (Read 73 times)

RODY.ELKHALIL · **on:** Mar 6, 2021

Trusted Products Company makes a household appliance with model number L800. 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 L800 units that can be produced. The industry market size for appliances increased 15% from 2017 to 2018. The following additional data are available for 2017 and 2018:

2017

2018

Units of L800 produced and sold

33,000

37,950

Selling price

$360

$345

Direct materials (square feet)

90,000

87,000

Direct material costs per square foot

$31

$33

Manufacturing capacity for L800 (units)

41,250

39,850

Total conversion costs

$866,250

$836,850

Conversion costs per unit of capacity

$29

What is the revenue effect of the growth component?
◦ $1,782,000 U
◦ $418,500 F
◦ $418,500 U
◦ $1,782,000 F

nickk12214 · **Reply #1 on:** Mar 6, 2021

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