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

question 27

Multiple Choice

Use the information below to answer the following question(s) .Following a strategy of product differentiation, Luke Company makes a high-end Appliance, AP15.Luke Company presents the following data for the years 1 and 2. Luke Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in year 2.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.Neither conversion costs or customer-service costs are affected by changes in actual volume.Luke Company has 46 customers in year 1 and 50 customers in year 2.The industry market size for high-end appliances increased 5% from year 1 to year 2.
-What is the Luke Company's operating income for year 1?

• A)$4,000,000
• B)$804,500
• C)$1,240,000
• D)$1,240,500
• E)$1,440,000

---

Definitions:

Fallacy Of Subjectivism

The logical error of assuming that individual feelings or subjective experiences can determine the truth of a claim.

Fallacy

A misleading or deceptive argument that appears logical but fails to hold up to scrutiny.

Truth

The property of statements that accurately reflect reality or are in accordance with facts.

Subjectivist Fallacies

Errors in reasoning that occur when subjective opinions or personal preferences are presented as objective facts.