Following a Strategy of Product Differentiation,Izzy's Limited Company Makes a High-End

question 86

Multiple Choice

Following a strategy of product differentiation,Izzy's Limited Company makes a high-end Appliance,XT15.Izzy's Limited presents the following data for the years 2017 and 2018:

Izzy's Limited 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.Izzy's Limited had 135 customers in 2017 and 140 customers in 2018.
What is operating income for 2017?

• A)$4,974,000
• B)$7,860,000
• C)$7,269,000
• D)$5,203,500

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Definitions:

Pizzas

A beloved Italian cuisine item featuring a circular flat dough base covered with tomatoes, cheese, and assorted toppings, cooked rapidly.

Production Possibilities Frontier

A plot that exhibits the ultimate production possibilities for two distinct products, with a basis on inputs that encompass resources and supplementary aspects.

Coats

Outer garments with sleeves that are worn over other clothes for warmth or protection.

Blankets

Textile products designed to provide warmth, typically used on beds but also for wrapping around oneself for comfort.