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Foley Products Company makes a household appliance with model number X500. The goal for 2020 is to reduce direct materials usage per unit. No
Foley Products Company makes a household appliance with model number X500. The goal for 2020 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 X500 units that can be produced. The industry market size for appliances increased 20% from 2019 to 2020. The following additional data are available for 2019 and 2020: 2019 2020 Units of X500 produced and sold 10,000 12,000 Selling price $150 $143 Direct materials (square feet) 31,000 30,000 Direct material costs per square foot $15 $16 Manufacturing capacity for X500 (units) 12,400 11,700 Total conversion costs $260,400 $245,700 Conversion costs per unit of capacity $21 $21 OA $1,236,000 OB. $1,716,000 OC. $975,600 OD. $990,300
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