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

question 31

Multiple Choice

Use the information below to answer the following question(s) .
Following a strategy of product differentiation, Luke Company makes a high-end Appliance, AP15. Luke Company presents the following data for the years 1 and 2.
Luke Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in year 2. 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. Neither conversion costs or customer-service costs are affected by changes in actual volume. Luke Company has 46 customers in year 1 and 50 customers in year 2. The industry market size for high-end appliances increased 5% from year 1 to year 2.
-What is the operating income in Year 2?

• A) $1,804,500
• B) $1,440,000
• C) $4,620,000
• D) $200,000
• E) $188,000

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Definitions:

Narrative Scenes

Artistic representations that tell a story through the depiction of events, characters, and settings, often found in literature, theater, and visual arts.

Temples

Sacred buildings dedicated to religious activities, worship, and prayers, often associated with significant architectural styles and cultural heritage.

Mexican Preclassic Period

The era in Mesoamerican history from about 2500 BC to AD 250, characterized by the rise of the first complex societies and notable for its artistic and architectural achievements.

BCE

Before the Common Era, a non-religious term equivalent to BC (Before Christ) used in the Gregorian calendar to denote years before the birth of Jesus Christ.