5. Trusted Products Company makes a household appliance with model number L800. The goal for 2018 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of L800 units that can be produced. The industry market size for appliances increased 15% from 2017 to 2018. The following additional data are available for 2017 and 2018: 2017 2018

Compute the flexible / variable cost effect of the growth component and indicate favorable or unfavorable.

	2017	2018
Units Produced & Sold	33,000	37,950
Selling Price	$ 360	$ 345
Direct Materials (square feet)	82,500	87,000
Direct Material Costs per square foot	$ 31	$ 33
Manufacturing capacity (units)	41,250	39,850
Total Conversion Costs	$ 866,250	$ 797,000
Conversion Costs per unit of capacity	$ 21	$ 20