Answered step by step
Verified Expert Solution
Question
1 Approved Answer
13-30 STRATEGIC ANALYSIS OF OPERATING INCOME. Dransfield Company manufactures an electronic component, ZP98. This component is significantly less expensive than similar products sold by
13-30 STRATEGIC ANALYSIS OF OPERATING INCOME. Dransfield Company manufactures an electronic component, ZP98. This component is significantly less expensive than similar products sold by Dransfield's competitors. Order-processing time is very short; however, approximately 10% of products are defective and returned by the customer. Returns and refunds are handled promptly. Yorunt Manufacturing, Dransfield's main competitor, has a higher-priced product with almost no defects but a longer order-processing time. Assume that in 2019, Dransfield has changed its processes and trained workers to recognize quality problems and fix them before products are finished and shipped to customers. Quality is now at an acceptable level. Cost per kilogram of materials is about the same as before, but conversion costs are higher, and Dransfield has raised its selling price in line with the market. Sales have increased and returns have decreased. Dransfield's managers attribute this to higher quality and a price that is still less than Yorunt's. Information about the current period (2019) and last period (2018) follows. LO 4 1. Change in operating income, $36,820 F
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started