Answer the Following Questions Using the Information Below

question 35

Multiple Choice

Answer the following questions using the information below:
Wingard Company makes a household appliance with model number X200. 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 X200 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:

-What is the net effect on operating income as a result of the price-recovery component?

• A)decreased operating income due to decreased selling price and inability to recover increased costs
• B)decreased operating income due to the inability to recover increased costs
• C)increased operating income due to the increased number of units produced and sold
• D)increased operating income due to the revenue effect of the price-recovery component

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Definitions:

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The act of assigning a fixed and oversimplified image or idea to a particular group of people or things.

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