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

question 23

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 change in operating income from year 1 to year 2?

• A) $147,600 favourable
• B) $143,520 favourable
• C) $156,120 favourable
• D) $156,120 unfavourable
• E) $242,000 favourable

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Definitions:

Reliable Data Source

A source that consistently provides accurate, valid, and trustworthy information.

Confounding Variables

Factors other than the independent variable that may cause or influence the outcome of a study, potentially leading to inaccurate conclusions.

Random Sample

A subset of a population chosen in such a way that every member has an equal chance of being included, ensuring the sample’s representativeness.

Chronic Diseases

Chronic diseases are long-term medical conditions that are generally progressive and require ongoing management, such as diabetes, heart disease, and arthritis.