Answer the Following Questions Using the Information Below:
Following a Strategy

question 95

Multiple Choice

Answer the following questions using the information below:
Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15. Arseniq presents the following data for the years 2014 and 2015:
$\begin{array}{lrr}&2014&2015\\\text { Units of XT15 produced and sold } & 50,000 & 52,500 \\\text { Selling price } & \$ 500 & \$ 550 \\\text { Direct materials (square feet) } & 150,000 & 153,750 \\\text { Direct materials costs per square foot } & \$ 50 & \$ 55 \\\text { Manufacturing capacity in units of XT15 } & 62,500 & 62,500\\\text { Total conversion costs } & \$ 6,250,000 & \$ 6,875,000 \\\text { Conversion costs per unit of capacity } & \$ 100 & \$ 110 \\\text { Selling and customer-service capacity (customers) } & 150 & 150 \\\text { Total selling and customer-service costs } & \$ 2,250,000 & \$ 2,343,750 \\\text { Selling and customer-service capacity cost per customer } & \$ 15,000 & \$ 15,625\end{array}$ Arseniq produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 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. Arseniq had 140 customers in 2014 and 145 customers in 2015.
-What is the revenue effect of the growth component?

• A) $2,625,000 F
• B) $1,250,000 U
• C) $2,625,000 U
• D) $1,250,000 F

---

Definitions:

Atrial Natriuretic Peptide

A hormone produced by the heart's atria that regulates blood pressure and fluid balance.

Sodium and Water

Essential components of bodily fluids that play crucial roles in maintaining homeostasis and regulating blood pressure and volume.

Excretion

The process by which waste products of metabolism and other non-useful materials are eliminated from an organism, primarily through the urine in humans.

Peripheral IV Access

The insertion of an intravenous line into a peripheral vein, typically in the arm or hand, to administer fluids, medications, or nutrients.