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

question 109

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 145 customers in 2017 and 150 customers in 2018.
What is the net effect on operating income as a result of the productivity component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar.)

• A) $1,664,016 U
• B) $124,672 F
• C) $1,664,016 F
• D) $124,672 U

---

Definitions:

Price Elasticity Of Demand

A measure of how much the quantity demanded of a good responds to a change in its price, with high elasticity indicating a significant response to price changes.

Cleveland Visitors Bureau

An organization dedicated to promoting tourism and providing information to visitors in the Cleveland area.

Weekend Getaway

A short leisure trip taken over a weekend, providing a brief break from daily routines.

Price Elasticity Of Demand

A measure of the responsiveness of the quantity demanded of a good to a change in its price.