Answer the Following Questions Using the Information Below:
Mitsufugi Company

question 114

Multiple Choice

Answer the following questions using the information below:
Mitsufugi Company makes a kitchen appliance with model number KA450.The goal for 2018 is to reduce direct materials usage per unit.No defective units are currently produced.Manufacturing conversion costs depend on production capacity defined in terms of KA450 units that can be produced.The industry market size for appliances increased 5% from 2017 to 2018.The following additional data are available for 2017 and 2018:
$$\begin{array} { l r r } & 2017 & 2018 \\\text { Units of KA450 produced and sold } & 10000 & 10300 \\\text { Selling price } & \$ 150 & \$ 145 \\\text { Direct materials (square metres) } & 30000 & 29000 \\\text { Direct material costs per square metre } & \$ 12 & \$ 13 \\\text { Manufacturing capacity for KA450 (units) } & 12500 & 12000 \\\text { Total conversion costs } & \$ 250000 & \$ 240000 \\\text { Conversion costs per unit of capacity } & \$ 20 & \$ 20\end{array}$$
-Which strategy is Mitsufugi Corporation pursuing?

• A)Cost leadership,because the selling price decreased.
• B)Product differentiation,because total conversion costs decreased.
• C)Product differentiation,because the units produced and sold increased.
• D)Cost leadership,because direct material costs per square metre increased.

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Definitions:

Operant Conditioning

A method of learning that employs rewards and punishments for behavior.

Rational-emotive Therapy

A form of cognitive-behavioral therapy founded by Albert Ellis that helps individuals identify and change irrational beliefs that cause emotional distress.

Paradoxical Intervention

A therapeutic technique in which a therapist prescribes or suggests the continuation of the behavior symptomatic of the client's issue, often leading to change through resistance to the suggestion.

Social-learning Theory

A theory which posits that people learn new behaviors through observing and imitating others, alongside direct reinforcement.