Question :
41)
________ measures the change in operating income attributable solely to : 1196087
41)
________ measures the change in operating income attributable solely to changes in a company’s profit margins between years 1 and 2. 41)
______ A)
The strategy component B)
The growth component C)
The productivity component D)
The cost leadership component E)
The price-recovery component
42)
________ measures the reduction in costs attributable to a reduction in the quantity of inputs used in year 2 relative to the quantity of inputs that would have been used in year 1 to produce the year 2 output. 42)
______ A)
The price-recovery component B)
The productivity component C)
The growth component D)
The cost leadership component E)
The strategy component
Use the information below to answer the following question(s).
Following a strategy of product differentiation, Luke Company makes a high-end Appliance, AP15. Luke Company presents the following data for the years 20×1 and 20×2.
20x120x2
Units of AP15 produced and sold20,00021,000
Selling price $200$220
Direct materials (square feet)60,00061,500
Direct materials costs per square foot
$20$22
Manufacturing capacity for AP15 (units)25,00025,000
Total manufacturing conversion costs$1,000,000$1,110,000
Manufacturing conversion costs
(per unit of capacity)$40$44
Selling and customer- service capacity (customers)6058
Total selling and customer-service costs$360,000$362,500
Cost per customer of selling and customer-service capacity$6,000$
6,250
Luke Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in 20×2.
Manufacturing conversion costs in each year depend on production capacity defined in terms of AP15 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. Luke Company has 46 customers in 20×1 and 50 customers in 20×2. The industry market size for high-end appliances increased 5% from 20×1 to 20×2.
43)
What is the operating income for 20×1? 43)
______ A)
$364,500 B)
$1,440,000 C)
$1,240,000 D)
$804,500 E)
$1,240,500
44)
What is operating income in 20×2? 44)
______ A)
$1,440,000 B)
$188,000 C)
$200,000 D)
$364,500 E)
$1,804,500
45)
What is the change in operating income from 20x1to 20×2? 45)
______ A)
$200,000 favourable B)
$364,500 favourable C)
$1,804,500 favourable D)
$1,440,000 favourable E)
$200,000 unfavourable
46)
What is the revenue effect of growth component? 46)
______ A)
$1,804,500 favourable B)
$164,500 favourable C)
$364,500 favourable D)
$200,000 favourable E)
$1,440,000 favourable
47)
What is the cost effect of growth component? 47)
______ A)
$200,000 favourable B)
$140,000 favourable C)
$60,000 favourable D)
$140,000 unfavourable E)
$60,000 unfavourable
48)
What is the net increase in operating income as a result of the growth component? 48)
______ A)
$60,000 favourable B)
$200,000 favourable C)
$140,000 favourable D)
$60,000 unfavourable E)
$140,000 unfavourable
49)
What is the revenue effect of price-recovery component? 49)
______ A)
$420,000 unfavourable B)
$179,000 unfavourable C)
$420,000 favourable D)
$241,000 unfavourable E)
$179,000 favourable
50)
What is the cost effect of price-recovery component? 50)
______ A)
$241,000 unfavourable B)
$420,000 unfavourable C)
$179,000 favourable D)
$420,000 favourable E)
$179,000 unfavourable
51)
What is the net increase in operating income as a result of the price-recovery component?
