Answer the Following Questions Using the Information Below:
Crynton Company

question 106

Multiple Choice

Answer the following questions using the information below:
Crynton Company makes a household appliance with model number L800. 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 L800 units that can be produced. The industry market size for appliances increased 5% from 2014 to 2015. The following additional data are available for 2014 and 2015:
$\begin{array}{lrr}&2014&2015\\\text { Units of L800 produced and sold } & 30,000 & 31,500 \\\text { Selling price } & \$ 300 & \$ 285 \\\text { Direct materials (square feet) } & 90,000 & 87,000 \\\text { Direct material costs per square foot } & \$ 30 & \$ 33\\\text { Manufacturing capacity for L800 (units) } & 37,500 & 36,000 \\\text { Total conversion costs } & \$ 750,000 & \$ 720,000 \\\text { Conversion costs per unit of capacity } & \$ 60 & \$ 60\end{array}$
-What is the cost effect of the growth component for conversion costs?

• A) $12,500 U
• B) $0
• C) $90,000 U
• D) $90,000 F

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Definitions:

High Turnover

The rapid rate at which an organization loses and must replace its employees, often indicating issues with employee satisfaction or engagement.

Delegating Decision Making

The process by which authority to make certain decisions is transferred from one individual, often a manager, to another person or group.

Integration

The process of combining separate parts or elements into a whole, often used in the context of systems, businesses, and technologies to improve efficiency or coherence.

Common Goals

Objectives shared by members of a group that provide a common direction and unite their efforts.