Answer the Following Questions Using the Information Below:
Mitsufugi Company

question 18

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:
$$\begin{array} { l r r } & 2017 & 2018 \\\text { Units of KA450 produced and sold } & 10000 & 10300 \\\text { Selling price } & \$ 150 & \$ 145 \\\text { Direct materials (square metres) } & 30000 & 29000 \\\text { Direct material costs per square metre } & \$ 12 & \$ 13 \\\text { Manufacturing capacity for KA450 (units) } & 12500 & 12000 \\\text { Total conversion costs } & \$ 250000 & \$ 240000 \\\text { Conversion costs per unit of capacity } & \$ 20 & \$ 20\end{array}$$
-What is operating profit for 2018?

• A)$678 500
• B)$997 500
• C)$876 500
• D)$428 500

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Definitions:

Fluctuations

Variations or changes in level, degree, or value that occur over time.

Responsibility Centres

Sections or departments within an organization, each overseen by a manager who is accountable for its performance and financial outcomes.

Support Department Costs

Expenses associated with departments that do not directly produce goods or services but support those who do, like maintenance or administration.

Manufacturing Costs

Expenses directly tied to the process of producing finished goods, including raw materials, labor, and overhead costs.