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

question 76

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 in Year 2?

• A)$1,804,500
• B)$1,440,000
• C)$4,620,000
• D)$200,000
• E)$188,000

---

Definitions:

Economic Growth

A rise in the output of goods and services in the economy from one time period to another.

Nutrition

Nutrition is the intake of food, considered in relation to the body's dietary needs.

Educational Attainment

The highest level of education an individual has completed.

Population Growth

The increase in the number of individuals in a population, often measured by the rate at which the number of individuals increases in a specific time period.