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

question 27

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 operating income for year 1?

• A)$4,000,000
• B)$804,500
• C)$1,240,000
• D)$1,240,500
• E)$1,440,000

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Definitions:

Hippocampus

A major component of the brains of humans and other vertebrates, playing critical roles in the consolidation of information from short-term memory to long-term memory and in spatial memory navigation.

London Taxi Drivers

refers to a study population often cited in psychological and neuroscientific research that has revealed notable increases in the size of the hippocampus associated with the complex navigational skills required by their profession.

Sensory Receptors

Sensory organs that detect physical stimulation from the external world and change that stimulation into information that can be processed by the brain.

Thalamus

A subcortical forebrain structure; the gateway to the brain for almost all incoming sensory information before that information reaches the cortex.