9. What is the cost effect of the price recovery component?A. $1,500,000 UB.. $4,587,500 UC. $4,587,500 FD. $1,500,000 F10. What is the net effect on operating income as a result of the price-recovery component?A. $5,912,500 FB. $10,500,000 FC. $5,912,500 UС.D. $10,500,000 U Peter Company makes a high-end Appliance, Y45. Peter presents the following data for theyears 2019 and 2020:Units of Y45 produced and soldSelling priceDirect materials (square feet)Direct materials costs per square footManufacturing capacity in units of Y45Total conversion costs2019100,000$1,000300,000$100125,0002020105,000$1,100307,500$110125,000$12,500,000 $13,750,000$110Conversion costs per unit of capacitySelling and customer-service capacity (customers)Total selling and customer-service costsSelling and customer-service capacity cost per customer$100300300$4,500,000$15,000$4,687,500$15,625Peter produces no defective units but it wants to reduce direct materials usage per unit of Y45.Manufacturing conversion costs in each year depend on production capacity defined in termsof Y45 units that can be produced. Selling and customer-service costs depend on the number ofcustomers that the customer and service functions are designed to support. Peter had 280customers in 2019 and 290 customers in 2020.

The variation in the operating income due to the variation in the sale price of the goods if the…

9. What is the cost effect of the price recovery component? A. $1,500,000 U B.. $4,587,500 U C. $4,587,500 F D. $1,500,000 F 10. What is the net effect on operating income as a result of the price-recovery component? A. $5,912,500 F B. $10,500,000 F C. $5,912,500 U D. $10,500,000 U

9. What is the cost effect of the price recovery component? A. $1,500,000 U B.. $4,587,500 U C. $4,587,500 F D. $1,500,000 F 10. What is the net effect on operating income as a result of the price-recovery component? A. $5,912,500 F B. $10,500,000 F C. $5,912,500 U D. $10,500,000 U

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

9. What is the cost effect of the price recovery component?
A. $1,500,000 U
B.. $4,587,500 U
C. $4,587,500 F
D. $1,500,000 F
10. What is the net effect on operating income as a result of the price-recovery component?
A. $5,912,500 F
B. $10,500,000 F
C. $5,912,500 U
С.
D. $10,500,000 U

Peter Company makes a high-end Appliance, Y45. Peter presents the following data for the
years 2019 and 2020:
Units of Y45 produced and sold
Selling price
Direct materials (square feet)
Direct materials costs per square foot
Manufacturing capacity in units of Y45
Total conversion costs
2019
100,000
$1,000
300,000
$100
125,000
2020
105,000
$1,100
307,500
$110
125,000
$12,500,000 $13,750,000
$110
Conversion costs per unit of capacity
Selling and customer-service capacity (customers)
Total selling and customer-service costs
Selling and customer-service capacity cost per customer
$100
300
300
$4,500,000
$15,000
$4,687,500
$15,625
Peter produces no defective units but it wants to reduce direct materials usage per unit of Y45.
Manufacturing conversion costs in each year depend on production capacity defined in terms
of Y45 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. Peter had 280
customers in 2019 and 290 customers in 2020.

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