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

question 125

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 price-recovery component?

• A) $61,000 favourable
• B) $60,850 unfavourable
• C) $60,100 favourable
• D) $60,100 unfavourable
• E) $61,000 unfavourable

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Definitions:

Definitional Premises

Statements or assertions used in arguments that provide the meaning or explanation of terms used within the argument.

Analogies

Comparisons made between two things that are alike in some respects, often used to explain or argue.

Conclusion

The statement that logically follows from the premises in an argument.

Explanations

Statements or accounts that make a subject or situation clear to the listener or reader.