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

question 117

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 180 customers in 2017 and 185 customers in 2018.
What is the revenue effect of the price-recovery component?

• A) $3,132,000 U
• B) $1,320,000 U
• C) $1,320,000 F
• D) $3,132,000 F

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Definitions:

Genetic Disorder

A disease or condition caused by an abnormality in an individual's DNA, which can be inherited or result from a genetic mutation.

Carrier

Person in apparent health whose chromosomes contain a pathologic mutant gene, which may be transmitted to his or her children.

Offspring

Descendants of a person, animal, or plant; the children or progeny.

Renal Clearance

A measure of the kidney's ability to remove substances from the blood and excrete them into the urine.