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

question 151

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 155 customers in 2017 and 160 customers in 2018.
What is the cost effect of the price-recovery component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar. )

• A)$365,580 F
• B)$365,580 U
• C)$1,845,740 U
• D)$1,845,740 F

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Definitions:

Chase Strategy

A capacity management approach that involves adjusting workforce and production levels to directly match demand fluctuations.

Production Planner

A professional responsible for determining the schedule and workflow of manufacturing processes to ensure efficient production.

Chase Strategy

A business approach where production meets the exact demand without holding excess inventory, adjusting output as needed.

Production Rate

The speed at which goods are manufactured or processed in a given amount of time, often measured in units per hour or per day.