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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 net increase in operating income as a result of the growth component?
Nominal Rate
The interest rate before adjustments for inflation. It is the rate that is quoted by banks and other financial institutions for savings accounts, loans, and mortgages.
Inflation
A general increase in prices across an economy, leading to a decrease in the purchasing power of money.
Purchasing Power
The purchasing power of a currency, measured by the quantity of goods or services a single unit can acquire.
Longest Expansion
A period characterized by sustained economic growth and expansion, often measured by GDP growth, without a recession.
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