1. Following strategy of product differentiation, E ng Corporation ma n do monitor, CM12. E sting Corporation presents the following data for the year 2017 2018 Units of CM12 produced and sold 2017 2018 Selling price 5,000 5,300 Direct materials (pounds) 5410 S40 Direct materials costs per pound 15,000 15,375 Manufacturing capacity for CM12 (units) 542 $44 Conversion costs 10,000 9,500 Conversion costs per unit of capacity $1,000,000 $1,045,000 $100 $110 Selling and customer service capacity (customers) 60 Total selling and customer service costs $360,000 $362,500 Selling and customer service capacity cost per customer $6,000 56,250 Ernsting Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM12 in 2018. Manufacturing conversion costs in each year depend on production capacity defined in terms of CM12 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. Ersting Corporation has 60 customers in 2017 and 58 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? d. What is the effect of the industry-market-size factor on operating income? Note: Please show the calculations and identify whether the change is "F" (favorable) or "UF" (unfavorable). 1. Following strategy of product differentiation, E ng Corporation ma n do monitor, CM12. E sting Corporation presents the following data for the year 2017 2018 Units of CM12 produced and sold 2017 2018 Selling price 5,000 5,300 Direct materials (pounds) 5410 S40 Direct materials costs per pound 15,000 15,375 Manufacturing capacity for CM12 (units) 542 $44 Conversion costs 10,000 9,500 Conversion costs per unit of capacity $1,000,000 $1,045,000 $100 $110 Selling and customer service capacity (customers) 60 Total selling and customer service costs $360,000 $362,500 Selling and customer service capacity cost per customer $6,000 56,250 Ernsting Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM12 in 2018. Manufacturing conversion costs in each year depend on production capacity defined in terms of CM12 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. Ersting Corporation has 60 customers in 2017 and 58 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? d. What is the effect of the industry-market-size factor on operating income? Note: Please show the calculations and identify whether the change is "F" (favorable) or "UF" (unfavorable)