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

question 9

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 revenue effect of growth component?

• A)$92,000 favourable
• B)$92,000 unfavourable
• C)$80,000 unfavourable
• D)$162,000 favourable
• E)$80,000 favourable

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Definitions:

Occurrence

The fact or frequency of something happening.

Affected

Being influenced or changed by an external factor.

Probability

A measure of the likelihood or chance that a particular event will occur, expressed as a number between 0 and 1.

Mammals

Warm-blooded vertebrates characterized by the presence of mammary glands, which in females produce milk for feeding their young.