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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 revenue effect of growth component?
Aversive Conditioning
A behavioral technique involving the use of unpleasant stimuli to reduce or eliminate undesirable behaviors.
Psychoanalysis
A therapeutic approach founded by Sigmund Freud that explores how unconscious thoughts and childhood experiences influence behavior and mental states.
Repressed Feelings
Emotions or thoughts that have been unconsciously blocked from consciousness due to being perceived as unacceptable or threatening.
Inner Conflicts
Psychological struggles within oneself, often arising from competing desires, beliefs, or needs.
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