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

question 115

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 175 customers in 2017 and 180 customers in 2018.
What is the revenue effect of the growth component?

• A)$3,780,000 F
• B)$1,200,000 U
• C)$3,780,000 U
• D)$1,200,000 F

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Definitions:

Non-controlling Interest

The portion of equity in a subsidiary not owned by the parent company, also known as minority interest.

Profit After Tax

The net income of a company after all taxes have been deducted from revenues.

Consolidated Equity

The total amount of owners' or shareholders' equity in a conglomerate, after all inter-company balances and transactions have been eliminated in consolidation.