Following a Strategy of Product Differentiation, Izzy's Limited Company Makes

question 23

Multiple Choice

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018:

Izzy's Limited 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 of XT15 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. Izzy's Limited had 155 customers in 2017 and 160 customers in 2018.
What is the cost effect of the price-recovery component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar.)

• A) $365,580 F
• B) $365,580 U
• C) $1,845,740 U
• D) $1,845,740 F

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Definitions:

Universal Causality

The principle that every event or state of affairs is determined by preceding events according to consistent laws.

David Hume

An 18th century Scottish philosopher, famous for his skepticism and empiricism.

Systematic Understanding

Comprehensive comprehension structured through organized and logical reasoning, often used in scientific and philosophical contexts.

Knowledge

Expertise or know-how developed through learning or direct involvement; a grasp of a subject matter, whether through academic means or real-world practice.