Murtha Corporation plans to grow by offering a sound system, the SS3000, that is superior and unique from the competition. Murtha believes that putting additional resources into R&D (research and development) and staying ahead of the competition with technological innovations is critical to implementing its strategy. Out of the two basic strategies, Murtha's strategy is

a) product leadership

b) cost leadership

c) product differentiation

d) downsizing

Bustamante Company makes a garden edge-trimmer. The goal for 2020 is to reduce direct materials usage per unit. No defective units are produced. Manufacturing conversion costs depend on production capacity defined in terms of garden edge-trimmers that can be produced. The following additional data are available for 2019 and 2020:

	2019	2020
Units of garden edge-trimmer produced and sold	10,000	11,000
Selling price	$98	$102
Direct materials (square feet)	30,000	29,000
Direct material costs per square foot	$10	$11
Manufacturing capacity for garden edge-trimmers (units)	12,500	11,000
Total manufacturing conversion costs	$250,000	$242,000
Manufacturing conversion costs per unit of capacity	$20	$22

What is the difference in operating income between 2019 and 2020?

a) $139,000 Unfavorable

b) $131,000 Favorable

c) $139,000 Favorable

d) $142,000 Favorable

Merrill Company makes a household appliance with model number X800. The goal for 2020 is to reduce direct materials usage per unit. No defective units are produced. Manufacturing conversion costs depend on production capacity defined in terms of X800 units that can be produced. The following additional data are available for 2019 and 2020:

	2019	2020
Units of X800 produced and sold	10,000	10,500
Selling price	$100	$96
Direct materials (square feet)	30,000	29,000
Direct material costs per square foot	$10	$10.50
Manufacturing capacity for X800s (units)	12,500	11,500
Total manufacturing conversion costs	$250,000	$218,500
Manufacturing conversion costs per unit of capacity	$20	$19

What is the revenue effect of the growth component of change in operating income, 2019 to 2020?

a) $48,000 Favorable

b) $50,000 Favorable

c) $20,000 Favorable

d) $120,000 Unfavorable