Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15.Arseniq presents the following data for the years 2014 and 2015:201451,000$500159,0002015Units of XT15 produced and aoldSelling priceDirect matenals (square feet)Direct matenals costs per square footManufacturning capacity in units of XT15Total conversion corts53,000$550162,750$5662700$6,520,800$104$6162700$6,959,700Convermion costs per urat of capaatySelling and customer-ervice capacity (customers)Total selling and customer-ærvice costsSelling and customer-service capacity cost per customer150$2,.265,000$15,100$111150$2340,000$15,600Arseniq 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 ofXT15 units that can be produced. Selling and customer-service costs depend on the number ofcustomers that the customer and service functions are designed to support. Arseniq had 135customers in 2014 and 140 customers in 2015.What is the net effect on operating income as a result of the growth component?O $650,824 UO $1.970,860 FO $1,970,860 UO $650,824 F

Answer is option 4 i.e $ 650, 840 ( approx) ( F)

ollowing a strategy of product Arseniq Company makes a high-er rseniq presents the following data for the years 2014 and 2015: 2014 51,000 $500 159,000 $56 2015 Units of XT15 produced and aold Selling price Direct matenals (square feet) Direct matenale costs per oquare foot Manufacturing capacity in units of XT15 Total convenion costs Conversion conts per unut of capaaty Selling and customer-ervice capacity (eustomere) Total elling and customer-ervice costs Selling and cuntomer-service capacity cost per customer 53,000 $550 162,750 $61 62700 62700 $6.959,700 $6.520,800 $104 $111 150 $2.265,000 $15,100 150 $2.340 000 $15,600 Arsenig produces no defective units but it wants to reduce direct materials usage

ollowing a strategy of product Arseniq Company makes a high-er rseniq presents the following data for the years 2014 and 2015: 2014 51,000 $500 159,000 $56 2015 Units of XT15 produced and aold Selling price Direct matenals (square feet) Direct matenale costs per oquare foot Manufacturing capacity in units of XT15 Total convenion costs Conversion conts per unut of capaaty Selling and customer-ervice capacity (eustomere) Total elling and customer-ervice costs Selling and cuntomer-service capacity cost per customer 53,000 $550 162,750 $61 62700 62700 $6.959,700 $6.520,800 $104 $111 150 $2.265,000 $15,100 150 $2.340 000 $15,600 Arsenig produces no defective units but it wants to reduce direct materials usage

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 4E: The following production data came from the records of Olympic Enterprises for the year ended...

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