Meale Company Makes a Household Appliance with Model Number X500

question 55

Multiple Choice

Meale Company makes a household appliance with model number X500. The goal for 2015 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 X500 units that can be produced. The industry market size for appliances increased 10% from 2014 to 2015. The following additional data are available for 2014 and 2015:
$\begin{array}{lrr}&2014&2015\\\text { Units of } X 500 \text { produced and sold } & 10,000 & 11,000 \\\text { Selling price } & \$ 100 & \$ 95 \\\text { Direct materials (square feet) } & 30,000 & 29,000 \\\text { Direct material costs per square foot } & \$ 10 & \$ 11\\\text { Manufacturing capacity for } X 500 \text { (units) } & 12,500 & 12,000 \\\text { Total conversion costs } & \$ 250,000 & \$ 240,000 \\\text { Conversion costs per unit of capacity } & \$ 20 & \$ 20\end{array}$
-What is operating income for 2014?

• A) $450,000
• B) $1,000,000
• C) $750,000
• D) $700,000

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Definitions:

Distributive Justice

The perceived fairness of how resources and rewards are distributed within a group or organization.

Ethical Egoism

The belief that actions are morally right if they benefit the individual making the decision.

Utilitarianism

A moral theory that suggests that the best action is the one that maximizes utility, usually defined as that which produces the greatest well-being of the greatest number of people.

Altruism

The selfless concern for the well-being of others, often manifesting in actions that prioritize others' interests above one's own.