Q$2/$Meale Company makes a household appliance with model number X$500.$ The goal for $2022$ 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 X$500$ units that can be produced. The industry market size for appliances increased $10\%$ from $2021$ to $2022.$ The following additional data are available for $2021$ and $2022$:

$20212022$

Units of X$500$ produced and sold $10,00011,000$

Selling price $$100$ $$95$

Direct materials $($square feet$)30,00029,000$

Direct material costs per square foot $$10$ $$11$

Manufacturing capacity for X$500($units$)12,50012,000$

Total conversion costs $$250,000$ $$240,000$

Conversion costs per unit of capacity $$20$ $$20$

Which strategy is Meale's Corporation pursuing?

A$)$

Product differentiation, because the units produced and sold increased.

B$)$

Product differentiation, because total conversion costs decreased.

C$)$

Cost leadership, because direct material costs per square foot increased.

D$)$

Cost leadership, because the selling price decreased.