Cost effect of the growth component 326400 u 0 0

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Principles of Information Systems
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Chapter 9 / Exercise 2
Principles of Information Systems
Reynolds/Stair
Expert Verified
Cost effect of the growth component = $326,400 U + 0 + 0 = $326,400 UNet effect on operating income as a result of the growth component = $800,000 F + $326,400 U = $473,600 F
Diff: 3Objective: 4AACSB: Application of knowledge
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Principles of Information Systems
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Chapter 9 / Exercise 2
Principles of Information Systems
Reynolds/Stair
Expert Verified
35) 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 2018:20172018Units of XT15 produced and sold50,00052,200Selling price$600$660Direct materials (square feet)155,000158,750Direct materials costs per square foot$55$60Manufacturing capacity in units of XT1562,60062,600Total conversion costs$6,510,400$6,886,000Conversion costs per unit of capacity$104$110Selling and customer-service capacity (customers)190190Total selling and customer-service costs$2,888,000$3,002,000Selling and customer-service capacity cost per customer$15,200$15,800Izzy's Limited produces no defective units but it wants to reduce direct materials usage perunit 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 180 customers in 2017 and 185 customers in 2018.What is the revenue effect of the price-recovery component?
D
Diff: 2Objective: 4AACSB: Application of knowledge
36) 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 2018:20172018Units of XT15 produced and sold58,00060,500Selling price$800$840Direct materials (square feet)159,000162,500Direct materials costs per square foot$54$61Manufacturing capacity in units of XT1563,40063,400Total conversion costs$6,720,400$7,291,000Conversion costs per unit of capacity$106$115Selling and customer-service capacity (customers)170170Total selling and customer-service costs$2,550,000$2,664,750Selling and customer-service capacity cost per customer$15,000$15,675Izzy's Limited produces no defective units but it wants to reduce direct materials usage perunit 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 155 customers in 2017 and 160 customers in 2018.What is the cost effect of the price-recovery component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar.)
C
Diff: 3Objective: 4AACSB: Application of knowledge

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