Following a Strategy of Product Differentiation, Janzen Inc Janzen Inc

question 49

Multiple Choice

Following a strategy of product differentiation, Janzen Inc. makes a high-end product entitled "40H.". Janzen Inc. presents the following data for the years 2011 and 2012: $\begin{array} { l r r } & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \\\text { Units of } 40 \mathrm { H } \text { started } & \$ 21,000 & \$ 22,000 \\\text { Selling price } & \$ 300 & \$ 320 \\\text { Direct materials cost per square foot } & \$ 50,000 & \$ 51,500 \\\text { Direct materials square feet } & 30 & 32 \\\text { Manufacturing capacity for } 40 \mathrm { H } \text { (units) } & 30,000 & 30,000 \\\text { Total conversion costs } & \$ 1,500,000 & \$ 1,600,000 \\\text { Conversion costs per unit of capacity } & \$ 30 & \$ 34 \\\text { Selling and customer service capacity (number of customers) } & 70 & 68 \\\text { Total selling and customer service costs } & \$ 460,000 & \$ 462,500 \\\text { Cost per customer of selling and customer service capacity } & \$ 7,000 & \$ 7,250\end{array}$ Janzen Inc. produces no defective units but it wants to reduce the direct materials usage per unit of 40H in 2012. Manufacturing conversion costs in each year depend upon production capacity defined in terms of the number of 40H 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. Janzen Inc. had 55 customers in 2011 and 62 customers in 2012. The industry market for 40H units increased by 6% from 2011 to 2012. Which of the following is a measure of the internal business perspective?

• A)Operating income growth from charging higher profit margins for 40H.
• B)Market share in the 40H market.
• C)Order delivery time.
• D)Improving manufacturing processes.
• E)Number of employees trained in quality management.

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Definitions:

Liability

The state of being responsible for something, especially in terms of a legal or financial obligation.

Right of Recourse

The legal right to demand compensation or payment from a third party after fulfilling an obligation, especially in financial transactions.

Discharge

(1) The termination of an obligation, such as occurs when the parties to a contract have fully performed their contractual obligations. (2) The termination of a bankruptcy debtor’s obligation to pay debts.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, to the person possessing it.