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