Cold Lake Company produces no defective units, but it wants to reduce direct materials usage per unit of AP15 in year 2 . Manufacturing conversion costs in each year depend on production capacity, defined in terms of AP15 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. Neither conversion costs nor customer-service costs are affected by changes in actual volume. Cold Lake Company has 46 customers in year 1 and 50 customers in year 2 . The industry market size for high-end appliances increased 5% from year 1 to year 2