Answer the Following Questions Using the Information Below

question 98

Multiple Choice

Answer the following questions using the information below:
Following a strategy of product differentiation, Loftus Company makes a high-end Appliance, AP15. Loftus Company presents the following data for the years 2011 and 2012:
Loftus Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in 2012. 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. Loftus Company has 46 customers in 2011 and 50 customers in 2012. The industry market size for high-end appliances increased 5% from 2011 to 2012.
-What is the net effect on operating income as a result of the productivity component?

• A)$179,000 F
• B)$45,500 F
• C)$241,000 U
• D)$420,000 F

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Definitions:

T-Test

A statistical test used to determine if there is a significant difference between the means of two groups.

Independent Populations

Populations that are not connected or influenced by each other, implying that the observations in one population are not affected by those in another.

Approximately Normal

Describes a distribution that closely follows a normal distribution, with slight deviations.

Normal Populations

Populations that exhibit a bell-shaped distribution curve, characterized by symmetry around the mean and decreasing frequency as the distance from the mean increases.