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

question 119

Essay

Use the information below to answer the following question(s).
Following a strategy of product differentiation,Despotovich Corporation makes a high-end Computer Monitor,CM12.Despotovich Corporation presents the following data for the years 1 and 2:
Despotovich Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM12 in Year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of CM12 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 nor customer-service costs are affected by changes in actual volume.Despotovich Corporation has 46 customers in Year 1 and 50 customers in Year 2 .The industry market size for high-end computer monitors increased 5% from Year 1 to Year 2.Of the $40 increase in unit selling price,$10 was attributable to a general increase in prices.
-Required:
a.What amount is the revenue effect of growth component?
b.What amount is the cost effect of growth component?
c.What is the change in operating income as a result of the growth component?

---

Definitions:

Do-good, Feel-good Phenomenon

The psychological effect where individuals experience positive emotions and improved well-being after performing altruistic acts or helping others.

Positive Traits

Characteristics or qualities that are viewed positively and contribute to the emotional and psychological well-being of an individual.

Social Ecology

A field that studies the relationships between people and their environment, emphasizing the social, institutional, and cultural contexts of environmental problems.

Relative Deprivation

A subjective feeling of disadvantage that arises from comparing oneself to others and believing oneself to be worse off.