Question :
11) What the operating income in Year 2?
A) $1,804,500
B) $1,440,000
C) : 1186025
11) What is the operating income in Year 2?
A) $1,804,500
B) $1,440,000
C) $4,620,000
D) $200,000
E) $188,000
12) What is the change in operating income from year 1 to year 2?
A) $620,000 favourable
B) $364,500 unfavourable
C) $364,500 favourable
D) $200,000 favourable
E) $200,000 unfavourable
13) What is the revenue effect of growth component?
A) $440,000 favourable
B) $400,000 unfavourable
C) $400,000 favourable
D) $200,000 favourable
E) $220,000 favourable
14) What is the cost effect of growth component?
A) $60,000 unfavourable
B) $30,000 favourable
C) $60,000 favourable
D) $200,000 favourable
E) $30,000 unfavourable
15) What is the net increase in operating income as a result of the growth component?
A) $340,000 unfavourable
B) $140,000 favourable
C) $160,000 favourable
D) $190,000 favourable
E) $250,000 unfavourable
16) What is the revenue effect of price-recovery component?
A) $400,000 favourable
B) $220,000 unfavourable
C) $400,000 unfavourable
D) $420,000 unfavourable
E) $420,000 favourable
17) What is the cost effect of price-recovery component?
A) $126,000 favourable
B) $126,000 unfavourable
C) $241,000 unfavourable
D) $420,000 favourable
E) $238,000 unfavourable
18) What is the net increase in operating income as a result of the price-recovery component?
A) $179,000 favourable
B) $179,000 unfavourable
C) $182,000 unfavourable
D) $20,000 favourable
E) $20,000 unfavourable
19) What is the productivity component of change in operating income?
A) $33,000 favourable
B) $45,500 favourable
C) $33,000 unfavourable
D) $45,500 unfavourable
E) $20,500 unfavourable
Use the information below to answer the following question(s).
Following a strategy of product differentiation, Barry Company makes an XX 300. Barry Company presents the following data for the years 1 and 2.
Year 1
Year 2
Units of XX 300 produced and sold
10,000
10,800
Selling price
$100
$115
Direct materials (litres)
30,000
31,900
Direct materials costs per litre
$15
$16
Manufacturing capacity for XX 300 (units)
12,500
12,500
Total manufacturing conversion costs
$250,000
$275,000
Manufacturing conversion costs (per unit of capacity)
$20
$22
Selling and customer-service capacity (customers)
30
29
Total selling and customer-service costs
$90,000
$90,625
Cost per customer of selling and customer-service capacity
$3,000
$3,120
Barry Company produces no defective units but it wants to reduce direct materials usage per unit of XX 300 in year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of XX 300 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. Neither conversion costs or customer-service costs are affected by changes in actual volume. Barry Company has 23 customers in year 1 and 25 customers in year 2. The industry market size for high-end appliances increased 5% from year 1 to year 2.
20) What is the operating income for year 1?
A) $210,000
B) $366,120
C) $1,000,000
D) $260,000
E) $231,000
