Answer the Following Questions Using the Information Below:
Mitsufugi Company

question 122

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 the cost effect of the growth component for conversion costs?

• A)$10 000 U
• B)Zero
• C)$10 000 F
• D)$12 500 U

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