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 2019 and 2020:

	2019	2020
Units of XT15 produced and sold	54,000	56,200
Selling price	$400	$470
Direct materials (square feet)	154,000	157,750
Direct material costs per square foot	$51	$59
Manufacturing capacity in units of XT15	63,500	63,500
Total conversion costs	$866,250	$836,850
Conversion costs per unit of capacity	$102	$108
Selling and customer-service capacity (customers)	150	150
Total selling and customer-service costs	$2,295,000	$2,388,750
Selling and customer-service capacity cost per customer	$15,300	$15,925

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 160 customers in 2019 and 165 customers in 2020. What is the net effect on operating income as a result of the price-recovery component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar.)

Question 34 options:

	$1,545,000 U
	$1,292,700 U
	$1,545,000 F
	$1,292,700 F