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

question 132

Multiple Choice

Use the information below to answer the following question(s) .Following a strategy of product differentiation, Barry Company makes an XX 300.Barry Company presents the following data for the years 1 and 2. Barry Company produces no defective units but it wants to reduce direct materials usage per unit of XX 300 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of XX 300 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.Barry Company has 23 customers in year 1 and 25 customers in year 2.The industry market size for high-end appliances increased 5% from year 1 to year 2.
-What is the Barry Company's productivity component of change in operating income?

• A)$31,620 favourable
• B)$11,120 favourable
• C)$11,120 unfavourable
• D)$33,520 favourable
• E)$33,520 unfavourable

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Definitions:

Defined-benefit Plan

A type of pension plan where an employer promises a specified pension payment upon retirement, based on the employee's earnings history, tenure of service, and age.

Defined Contribution Plan

A type of retirement plan where the employee, employer, or both make contributions on a regular basis, and the benefits at retirement depend on the account's performance.

Administrative Costs

Expenses incurred in the day-to-day operations of a business that are not directly tied to production.

Infrastructure Costs

Expenses associated with the basic physical and organizational structures needed for the operation of a society or enterprise, such as roads, telecommunications, and utilities.