Trusted Products Company makes a household appliance with model number L800. The goal for 2020 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 3% from 2019 to 2020. The following additional data are available for 2019 and 2020 Units of L800 produced and sold Selling price Direct materials (square feet Direct material costs per square foot Manufacturing capacity for L800 (units) Total conversion costs Conversion costs per unit of capacity 2019 2020 38,000 39,140 $310 $290 97,000 94,000 $34 $37 46,100 47,500 $1,140,000 $1,106,400 $24 $24 OA No, because operating income decreased OB No. because direct material cost per unit decreased OC No, because direct materials usage per unit increased OD. Yes, because total revenues increased

Trusted Products Company makes a household appliance with model number L800. The goal for 2020 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 3% from 2019 to 2020. The following additional data are available for 2019 and 2020 Units of L800 produced and sold Selling price Direct materials (square feet Direct material costs per square foot Manufacturing capacity for L800 (units) Total conversion costs Conversion costs per unit of capacity 2019 2020 38,000 39,140 $310 $290 97,000 94,000 $34 $37 46,100 47,500 $1,140,000 $1,106,400 $24 $24 OA No, because operating income decreased OB No. because direct material cost per unit decreased OC No, because direct materials usage per unit increased OD. Yes, because total revenues increased

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 41E

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