Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15. Arseniq presents the following data for the years 2014 and 2015:
Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15. Arseniq presents the following data for the years 2014 and 2015: Units of XT15 produced and sold Selling price Direct materials (square feet) Direct materials costs per square foot Manufacturing capacity in units of XT15 2014 59,000 $600 2015 61,500 $650 154,000 157,200 $60 $68 63,500 63,500 $6,985,000 $7,429,500 Conversion costs per unit of capacity Selling and customer-service capacity (customers) $110 190 $117 190 Total selling and customer-service costs $2,907,000 $3,030,500 Selling and customer-service capacity cost per customer $15,300 $15,950 Total conversion costs Arseniq 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. Arseniq had 175 customers in 2014 and 180 customers in 2015. What is the revenue effect of the growth component? $1,500,000 U $3,075,000 F O $3,075,000 U $1,500,000 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