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:

Quality of Work

The degree to which work performed meets or exceeds established standards in terms of accuracy, thoroughness, and performance efficiency.

Payroll Office

The department within an organization that is responsible for processing employee paychecks, withholding taxes, and maintaining financial records related to employment.

Human Resources

The department within an organization responsible for managing employee-related processes, including recruitment, training, and payroll.

Accounting and Finance

The area concerned with the management of funds and monetary transactions within an organization.