Answer the Following Questions Using the Information Below

question 70

Multiple Choice

Answer the following questions using the information below:
Meale Company makes a household appliance with model number X500. The goal for 2012 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of X500 units that can be produced. The industry market size for appliances increased 10% from 2011 to 2012. The following additional data are available for 2011 and 2012:

-Overall, was Meale's strategy successful in 2012?

• A)No, because the selling price per unit decreased.
• B)Yes, because operating income increased.
• C)Yes, because less direct materials were used.
• D)No, because more units were produced and sold.

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Definitions:

Written Offer

A formal proposal or bid presented in written form, detailing the terms under which the writer is willing to engage in a contract or agreement.

Requirements Contract

A contract in which the seller agrees to supply all of the buyer's needs for a particular good or service over a specified period.

Output Contract

An agreement in which a seller agrees to sell all of its production to a single buyer, typically used to ensure a steady market for the seller's product.

Promissory Estoppel

An equitable doctrine that prevents a party from going back on a promise even if a legal contract does not exist, provided that the promisee has relied on that promise to their detriment.