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

question 29

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 net increase in operating income as a result of the price-recovery component?

• A)$179,000 favourable
• B)$179,000 unfavourable
• C)$182,000 unfavourable
• D)$20,000 favourable
• E)$20,000 unfavourable

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Definitions:

Paraphilia

Unusual sexual interests, or the sexual attraction to objects, situations, or individuals that are not part of normative stimulation.

Sexual Arousal

The physiological and mental state of being prepared for sexual activity, involving increased blood flow, heart rate, and heightened sensory perception.

STIs

Infections transmitted sexually, conditions that are spread from person to person via sexual intercourse.

Protective Value

The degree to which something is capable of safeguarding from harm or adverse conditions.