Following a Strategy of Product Differentiation, Rumsen Tools Corp Rumsen Produces No Defective Units but It Wants to Reduce

question 45

Multiple Choice

Following a strategy of product differentiation, Rumsen Tools Corp. makes a hand sander sold in hardware stores. Rumsen presents the following data for the years 2011 and 2012: $\begin{array} { | l | r | r | } \hline & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \\\hline \text { Units started } & \$ 11,000 & \$ 11,500 \\\hline \text { Selling price } & \$ 200 & \$ 210 \\\hline \text { Direct materials cost per square foot } & \$ 40,000 & \$ 40,750 \\\hline \text { Direct materials square feet } & 7 & 10 \\\hline \text { Manufacturing capacity (units) } & 13,500 & 13,500 \\\hline \text { Total conversion costs } & \$ 3,500,000 & \$ 377,500 \\\hline \text { Conversion costs per unit of capacity } & \$ 30 & \$ 32 \\\hline \text { Selling and customer service capacity (mumber of customers) } & 20 & 19 \\\hline \text { Total selling and customer service costs } & \$ 80,000 & \$ 80,625 \\\hline \text { Cost per customer of selling and customer service capacity } & \$ 4,000 & \$ 4,125 \\\hline\end{array}$ Rumsen produces no defective units but it wants to reduce the direct materials usage per hand sanderin 2012. Manufacturing conversion costs in each year depend upon production capacity defined in terms of the number of units that can be produced. Selling and customer-service costs depend upon the number of customers that the customer and service functions are designed to support. Rumsen had 33 customers in 2011 and 35 customers in 2011. The industry market size for hand sanders had increased by 7% from 2011 to 2012. Which of the following is a measure of the learning and growth perspective?

• A)Operating income growth from charging higher profit margins for hand sanders.
• B)Market share in the hand sander market.
• C)Order delivery time.
• D)Improving manufacturing processes.
• E)Increased customer satisfaction.

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Definitions:

Physical Understandings

The grasp of physical principles and how objects interact in the physical world, often developed in early childhood through observation and interaction.

Absent Objects

Concepts or items that are not physically present but can still have effects or be represented in thought.

Motor Abilities

The physical skills related to movement and coordination, including gross and fine motor skills.

Object Permanence

The concept that objects remain in existence even when they're not being perceived through sight, sound, touch, smell, or any other senses.