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

question 13

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 165 customers in 2017 and 170 customers in 2018.
What is the net effect on operating income as a result of the growth component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar. )

• A)$2,977,094 F
• B)$473,600 F
• C)$473,600 U
• D)$2,977,094 U

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Definitions:

Specialization

The process of focusing on a specific area of study or work, developing expertise in a particular field.

Standardization

The process of implementing and developing technical standards to ensure consistency, safety, and interoperability of products or processes.

Organizational Behaviour

The study of how people interact within groups in a work environment to understand human aspects in workplaces.

Management

The process of effectively organizing, planning, leading, and controlling resources to achieve organizational objectives.