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Answer the Following Questions Using the Information Below:
Following a Strategy

question 71

Multiple Choice

Answer the following questions using the information below:
Following a strategy of product differentiation,Platypus Company makes a high-end appliance,AP15.Platypus Company presents the following data for the years 2017 and 2018:
20172018 Units of AP15 produced and sold 2000021000 Selling price $200$220 Direct materials (square metres)  6000061500 Direct materials costs per square metre $20$22 Manufacturing capacity in urits of AP15 2500025000 Total conversion costs $1000000$1110000 Conversion costs per unit of capacity $40$44 Selling and customer-service capacity (customers)  6058 Total selling and customer-service costs $360000$362500 Selling and customer-service capacity cost per customer $6000$6250\begin{array} { l r r } & 2017 & 2018 \\\text { Units of AP15 produced and sold } & 20000 & 21000 \\\text { Selling price } & \$ 200 & \$ 220 \\\text { Direct materials (square metres) } & 60000 & 61500 \\\text { Direct materials costs per square metre } & \$ 20 & \$ 22 \\\text { Manufacturing capacity in urits of AP15 } & 25000 & 25000 \\\text { Total conversion costs } & \$ 1000000 & \$ 1110000 \\\text { Conversion costs per unit of capacity } & \$ 40 & \$ 44 \\\text { Selling and customer-service capacity (customers) } & 60 & 58 \\\text { Total selling and customer-service costs } & \$ 360000 & \$ 362500 \\\text { Selling and customer-service capacity cost per customer } & \$ 6000 & \$ 6250\end{array} Platypus Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in 2019.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.Platypus Company has 46 customers in 2017 and 50 customers in 2018.The industry market size for high-end appliances increased 5% from 2017 to 2018.
-What is the net effect on operating profit as a result of the productivity component?

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Definitions:

Inconspicuous Level

A state or condition not clearly visible or attracting attention, often due to subtlety or understatement.

Best Chance

The most favorable or advantageous opportunity or possibility to achieve success or a desired outcome.

Job Opportunity

An available position of employment where an individual has the chance to apply for work that matches their skills and interests.

Approaching

The act of coming near or closer to something or someone in physical space or time.

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