21) What is the cost effect of the growth component for direct materials?
A) $135,000 U
B) $450,000 F
C) $450,000 U
D) $135,000 F
22) What is the cost effect of the growth component for conversion costs?
A) $12,500 U
B) $0
C) $90,000 U
D) $90,000 F
23) Overall, was Crynton's strategy successful in 2015?
A) Yes, because total revenues increased
B) No, because operating income decreased
C) No, because direct materials usage per unit increased
D) No, because direct material cost per unit decreased
Answer the following questions using the information below:
Strategic Analysis of Profitability of Ransham Company:
Income
Statement
Amounts
in 2014
Revenue and
Cost Effects
of Growth
Component
in 2015
Revenue and
Cost Effects of
Price-Recovery
Component
in 2015
Cost Effect of
Productivity
Component
in 2015
Income
Statement
Amounts
in 2015
Revenues ($)
34,000
10,000 F
1,000 U
(b)
(e)
Costs
23,500
(a)
500 U
(c)
26,100
Operating income
10,500
5,500 F
1,500 U
2,400 F
(d)
24) What is the cost effect of the growth component (a)?
A) $15,500 F
B) $4,500 U
C) $15,500 U
D) $4,500 F
25) What is the revenue effect of the productivity component (b)?
A) $0
B) $2,400 U
C) $900 F
D) $2,400 F
26) What is the cost effect of the productivity component (c)?
A) $0
B) $1,200 U
C) $900 F
D) $2,400 F
Or
Cost effect of the productivity component = $10,500 + $4,500 U + $500 U - $16,900 = $2,400
27) What is the operating income amount for 2015 (d)?
A) $43,000
B) $25,000
C) $16,900
D) $46,000
28) What is the revenue amount for 2015 (e)?
A) $9,000
B) $25,000
C) $43,000
D) $16,900
Answer the following questions using the information below:
Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15. Arseniq presents the following data for the years 2014 and 2015:
20142015
Units of XT15 produced and sold50,00052,500
Selling price$500$550
Direct materials (square feet)150,000153,750
Direct materials costs per square foot$50$55
Manufacturing capacity in units of XT1562,50062,500
Total conversion costs$6,250,000$6,875,000
Conversion costs per unit of capacity$100$110
Selling and customer-service capacity (customers)150150
Total selling and customer-service costs$2,250,000$2,343,750
Selling and customer-service capacity cost per customer$15,000$15,625
Arseniq 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. Arseniq had 140 customers in 2014 and 145 customers in 2015.
29) What is operating income for 2014?
A) $9,000,000
B) $11,200,000
C) $11,440,000
D) $9,207,000
30) What is operating income in 2015?
A) $11,440,000
B) $11,200,000
C) $9,000,000
D) $9,207,000
