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

question 105

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 cost effect of growth component?

• A) $7,500 favourable
• B) $28,500 favourable
• C) $7,500 unfavourable
• D) $28,500 unfavourable
• E) $30,000 favourable

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Definitions:

Job Security

The probability that an individual will retain their job for a certain period without the risk of becoming unemployed.

Individualistic Cultures

Societies where personal independence and individual achievements are valued highly, and relationships are often secondary.

Loyalty

A strong feeling of support or allegiance towards someone or something, often manifested through continuous patronage or support.

Assertiveness

The quality of being confident and self-assured without being aggressive, important in effective communication.