Cost accounting Question 1

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018: 2017 2018 Units of XT15 produced and sold 52,000 54,000 Selling price $600 $670 Direct materials (square feet) 153,000 156,750 Direct materials costs per square foot $53 $61 Manufacturing capacity in units of XT15 64,000 64,000 Total conversion costs $6,400,000 $6,784,000 Conversion costs per unit of capacity $100 $106 Selling and customer-service capacity 190 190 (customers) Total selling and customer-service costs $2,926,000 $3,054,250 Selling and customer-service capacity cost per $15,400 $16,075 customer Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 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. Izzy's Limited had 175 customers in 2017 and 180 customers in 2018. What is the revenue effect of the growth component? O $1,200,000 0 $1,200,000 F $3,780,000 U