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Use the following information for questions 1 - 12: Following a strategy of product differentiation, ABC Company makes a high-end appliance, CH26. ABC Company presents
Use the following information for questions 1 - 12: Following a strategy of product differentiation, ABC Company makes a high-end appliance, CH26. ABC Company presents the following data for the years 2019 and 2020: 2019 2020 Units of CH26 produced and sold 54,000 56,200 Selling price per unit $400 $420 Direct materials (square feet) 154,000 157,750 Direct materials costs per square foot $51 $59 Manufacturing capacity in units of CH26 63,500 63,500 Total conversion costs $6,477,000 $6,858,000 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 Although the ABC Company is not producing defective products, it wants to reduce its usage of direct materials per unit of the CH26. Manufacturing conversion costs in each year depend on production capacity defined in terms of CH26 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. ABC Company had 135 customers in 2019 and 140 customers in 2020. What is the operating income 2019-2020? What is the change in operating income from 2019-20207|| Calculate the revenue effect of growth component Calculate the cost effect of the growth component What is the net effect on net operating income of the growth component? Calculate the revenue effect of the price recovery component Calculate the cost effect of the price recovery component What is the net effect on net operating income of the price recovery? How would you evaluate the success of ABC Company's strategy implementation
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