Following a Strategy of Product Differentiation,Americonic Corporation Makes a High-End

question 128

Essay

Following a strategy of product differentiation,Americonic Corporation makes a high-end computer monitor.Americonic Corporation presents the following data for the years 2017 and 2018:

Somerset Corporation produces no defective units but it wants to reduce direct materials usage per unit in 2018.Manufacturing conversion costs in each year depend on production capacity defined in terms of 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.Ernsting Corporation has 100 customers in 2017 and 115 customers in 2018.The industry market size for high-end computer monitors increased 5% from 2017 to 2018.
Required:
a.What is the revenue effect of the growth component?
b.What is the cost effect of the growth component?
c.What is the net effect on operating income as a result of the growth component?

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Definitions:

Familial Hypercholesterolemia

A genetic disorder characterized by high cholesterol levels, leading to an increased risk of heart disease.

Homozygous

Having two identical alleles for a particular gene, which can result in the gene being expressed in a more uniform manner.

Heterozygous

Referring to an organism that has two different alleles for a specific gene.

Incomplete Dominance

A genetic situation where neither allele dominates and the phenotype is a blend or mixture of the parental traits.