Question :
11) Successful implementation of a product differentiation strategy will result : 1211784
11) Successful implementation of a product differentiation strategy will result in ________.
A) a large favorable growth and price-recovery components
B) a large favorable price-recovery and productivity components
C) a large favorable productivity and growth components
D) only a large favorable growth component
12) Assuming previous year’s production capacity was inadequate to produce current year output, the cost effect of growth for fixed costs is calculated by multiplying the difference between ________ by price per unit of capacity in the previous year.
A) capacity units required to produce previous year output in current year and the current year capacity units
B) capacity units required to produce current year output in previous year and the current year capacity units
C) capacity units required to produce previous year output in current year and the previous year capacity units
D) capacity units required to produce current year output in previous year and the previous year capacity units
13) Assuming previous year’s production capacity was adequate to produce current year output, the cost effect of growth for fixed costs is calculated by multiplying the difference between ________ by price per unit of capacity in the previous year.
A) actual units of capacity in current year and actual units of capacity in previous year
B) capacity units required to produce current year output in previous year and the current year capacity units
C) actual units of capacity in previous year and actual units of capacity in previous year
D) capacity units required to produce previous year output in current year and the previous year capacity units
14) The revenue effect of price recovery is calculated by multiplying the difference in selling price (current year minus the previous year) by ________.
A) actual units sold in the current year
B) budgeted units sold in the previous year
C) budgeted units sold in the current year
D) actual units sold in the previous year
15) An operating income analysis of Argon Company revealed the following:
Operating income for 2014$1,207,000
Add growth component102,000
Deduct price-recovery component(95,000)
Add productivity component90,000
Operating income for 2015$1,304,000
Argon’s operating income gain is consistent with the ________.
A) product differentiation strategy
B) product leadership strategy
C) cost differentiation strategy
D) cost leadership strategy
16) The cost effect of productivity for variable costs is calculated by multiplying the difference in actual input units used to produce current year output and units of input required to produce current year output in previous year by the ________.
A) price per input unit of previous year
B) price per unit of capacity in the previous year
C) price per unit of capacity in the current year
D) price per input unit of current year
Meale Company makes a household appliance with model number X500. The goal for 2015 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 2014 to 2015. The following additional data are available for 2014 and 2015:
20142015
Units of X500 produced and sold10,00011,000
Selling price$100$95
Direct materials (square feet)30,00029,000
Direct material costs per square foot$10$11
Manufacturing capacity for X500 (units)12,50012,000
Total conversion costs$250,000$240,000
Conversion costs per unit of capacity$20$20
17) What is operating income for 2014?
A) $450,000
B) $1,000,000
C) $750,000
D) $700,000
18) What is operating income for 2015?
A) $1,045,000
B) $726,000
C) $486,000
D) $476,000
19) Which of the following statements is true of strategic analysis of operating income?
A) Change in operating income from one period to any future period can be subdivided into product differentiation, cost leadership, and growth components.
B) Subdividing the change in operating income to evaluate the success of a strategy has no similarity to the variance analysis.
C) Management accountants compare actual and budgeted operating performance over the same time periods.
D) It focuses on differences in individual categories of costs (direct materials, direct manufacturing labor, and overheads).
Answer the following questions using the information below:
Crynton Company makes a household appliance with model number L800. The goal for 2015 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 5% from 2014 to 2015. The following additional data are available for 2014 and 2015:
20142015
Units of L800 produced and sold30,00031,500
Selling price$300$285
Direct materials (square feet)90,00087,000
Direct material costs per square foot$30$33
Manufacturing capacity for L800 (units)37,50036,000
Total conversion costs$750,000$720,000
Conversion costs per unit of capacity$60$60
20) What is the revenue effect of the growth component?
A) $450,000 U
B) $135,000 F
C) $135,000 U
D) $450,000 F
