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

question 91

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 productivity component of change in operating income?

• A) $31,620 favourable
• B) $11,120 favourable
• C) $11,120 unfavourable
• D) $33,520 favourable
• E) $33,520 unfavourable

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Definitions:

Exclusive Distribution

Distribution strategy involving limited market coverage by a single retailer or wholesaler in a specific geographical territory.

Luxury Automobiles

High-end vehicles that offer superior comfort, performance, and amenities, often characterized by their higher price points and status symbol.

Franchised Specialty Goods

Retail products sold through outlets operating under a franchise agreement, often focusing on a niche market.

Rack Jobber

A company or individual who provides and stocks merchandise in stores, typically in specialty areas, and shares profits with the retailer or pays for shelf space.