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

question 37

Multiple Choice

Use the information below to answer the following question(s) .Following a strategy of product differentiation, Barry Company makes an XX 300.Barry Company presents the following data for the years 1 and 2. Barry Company produces no defective units but it wants to reduce direct materials usage per unit of XX 300 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of XX 300 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.Barry Company has 23 customers in year 1 and 25 customers in year 2.The industry market size for high-end appliances increased 5% from year 1 to year 2.
-Successful implementation of a cost leadership strategy will result in

• A)large favorable growth and price-recovery components.
• B)large favorable price-recovery and productivity components.
• C)large favorable productivity and growth components.
• D)only a large favorable growth component.
• E)a price-recovery component greater than a growth component.

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Definitions:

Revenue Model

A framework for generating financial income, identifying which revenue source to pursue, what value to offer, how to price the value, and who pays for the value.

Flat Fee

A pricing structure that charges a single fixed fee for a service, regardless of usage or time expended.

Franchising Revenue Model

Earning revenue by selling franchises of an existing business to allow another party to trade under the name of that business.

Existing Business

An enterprise that is currently operational and has gone past the startup phase, often with established customers, revenue streams, and market presence.