Question
Trusted Products Company makes a household appliance with model number L800. The goal for 2020 is to reduce direct materials usage per unit. No defective
Trusted Products Company makes a household appliance with model number L800. 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 L800 units that can be produced. The industry market size for appliances increased
15%
from 2019 to 2020. The following additional data are available for 2019 and 2020:
| 2019 | 2020 | |
| Units of L800 produced and sold | 35,000 | 40,250 |
| Selling price | $370 | $350 |
| Direct materials (square feet) | 93,000 | 91,500 |
| Direct material costs per square foot | $32 | $35 |
| Manufacturing capacity for L800 (units) | 43,750 | 42,150 |
| Total conversion costs | $918,750 | $885,150 |
| Conversion costs per unit of capacity | $29 | $29 |
What is the revenue effect of the growth component?
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Effective Auditing For Corporates Ensuring That All The Risks Are Covered
Authors: Bloomsbury, Joe Oringel
1st Edition
1849300445, 978-1849300445
