TableUnits of AP15 produced and soldSelling priceDirect materials (square metres)Direct materials costs per square metreManufacturing capacity for AP15 (units)Total manufacturing conversion costsManufacturing conversion costs (per unit of capacity)Selling and customer-service capacity (customers)Total selling and customer-service costsCost per customer of selling and customer-service capacityYear 1Year 220,00021,000$200$22060,00061,500$20$2225,00025,000$1,000,000 $1,100,000$4060$4458$360,000 $362,500$6,000$6,250 Following a strategy of product differentiation, Cold Lake Company makes a high-end appliance, AP15. Cold LakeCompany presents the data in the table for years 1 and 2.(Click the icon to view the table.)Cold Lake Company produces no defective units, but it wants to reduce direct materials usage per unit of AP15 in year2. Manufacturing conversion costs in each year depend on production capacity, defined in terms of AP15 units that canbe produced. Selling and customer-service costs depend on the number of customers that the customer and servicefunctions are designed to support. Neither conversion costs nor customer-service costs are affected by changes inactual volume. Cold Lake Company has 46 customers in year 1 and 50 customers in year 2. The industry market sizefor high-end appliances increased 5% from year 1 to year 2.What is the Cold Lake Company's operating income in Year 2?OA. $200,000OB. $188,000OC. $4,620,000OD. $1,440,000OE. $1,804,500

An income statement is a financial report that indicates the revenue and expenses of a business. It…

Cold Lake Company produces no defective units, but it wants to reduce direct materials usage per unit of AP 15 in yea 2. Manufacturing conversion costs in each year depend on production capacity, defined in terms of AP15 units that ca be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs nor customer-service costs are affected by changes in actual volume. Cold Lake Company has 46 customers in year 1 and 50 customers in year 2. The industry market size for high-end appliances increased 5% from year 1 to year 2. What is the Cold Lake Company's operating income in Year 2? OA. $200,000 OB. $188,000 OC. $4,620,000 OD. $1,440,000 OE. $1,804,500 ...

Cold Lake Company produces no defective units, but it wants to reduce direct materials usage per unit of AP 15 in yea 2. Manufacturing conversion costs in each year depend on production capacity, defined in terms of AP15 units that ca be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs nor customer-service costs are affected by changes in actual volume. Cold Lake Company has 46 customers in year 1 and 50 customers in year 2. The industry market size for high-end appliances increased 5% from year 1 to year 2. What is the Cold Lake Company's operating income in Year 2? OA. $200,000 OB. $188,000 OC. $4,620,000 OD. $1,440,000 OE. $1,804,500 ...

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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Question

Table
Units of AP15 produced and sold
Selling price
Direct materials (square metres)
Direct materials costs per square metre
Manufacturing capacity for AP15 (units)
Total manufacturing conversion costs
Manufacturing conversion costs (per unit of capacity)
Selling and customer-service capacity (customers)
Total selling and customer-service costs
Cost per customer of selling and customer-service capacity
Year 1
Year 2
20,000
21,000
$200
$220
60,000
61,500
$20
$22
25,000
25,000
$1,000,000 $1,100,000
$40
60
$44
58
$360,000 $362,500
$6,000
$6,250

Following a strategy of product differentiation, Cold Lake Company makes a high-end appliance, AP15. Cold Lake
Company presents the data in the table for years 1 and 2.
(Click the icon to view the table.)
Cold Lake Company produces no defective units, but it wants to reduce direct materials usage per unit of AP15 in year
2. Manufacturing conversion costs in each year depend on production capacity, defined in terms of AP15 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. Neither conversion costs nor customer-service costs are affected by changes in
actual volume. Cold Lake Company has 46 customers in year 1 and 50 customers in year 2. The industry market size
for high-end appliances increased 5% from year 1 to year 2.
What is the Cold Lake Company's operating income in Year 2?
OA. $200,000
OB. $188,000
OC. $4,620,000
OD. $1,440,000
OE. $1,804,500

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