Use the Information Below to Answer the Following Question(s)

question 45

Multiple Choice

Use the information below to answer the following question(s) .Following a strategy of product differentiation, Luke Company makes a high-end Appliance, AP15.Luke Company presents the following data for the years 1 and 2. Luke Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of AP15 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.Neither conversion costs or customer-service costs are affected by changes in actual volume.Luke Company has 46 customers in year 1 and 50 customers in year 2.The industry market size for high-end appliances increased 5% from year 1 to year 2.
-What is the Luke Company's cost effect of price-recovery component?

• A)$126,000 favourable
• B)$126,000 unfavourable
• C)$241,000 unfavourable
• D)$420,000 favourable
• E)$238,000 unfavourable

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Definitions:

Underprescribed

The situation where medications or therapies are provided at levels less than what is optimal for the condition being treated.

Psychological Disorders

Mental health conditions characterized by changes in behavior, emotion, or thought patterns that significantly impact daily functioning.

Community Mental Health Centres

Facilities that provide mental health services to a local community, often integrating care across various specialties.

Public Mental Hospital System

The public mental hospital system comprises state or government-funded institutions providing psychiatric care and treatment for people with mental illnesses.