Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 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. Izzy's Limited had 140 customers in 2017 and 145 customers in 2018. What is operating income in 2018? $15,921,775 O $15,841,900 $7,463,500 $9,212,000
Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 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. Izzy's Limited had 140 customers in 2017 and 145 customers in 2018. What is operating income in 2018? $15,921,775 O $15,841,900 $7,463,500 $9,212,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Following a strategy of product differentiation, Izzy's Limited Company makes a high-
end Appliance, XT15. Izzy's Limited presents the following data for the years 2017
and 2018:
Units of XT15 produced and sold
Selling price
Direct materials (square feet)
Direct materials costs per square
foot
Manufacturing capacity in units of
XT15
Total conversion costs
Conversion costs per unit of
capacity
Selling and customer-service capacity
(customers)
2017
58,000
$500
158,000
$51
62,900
$6,290,000$6,856,100
$100
What is operating income in 2018?
$15,921,775
$15,841,900
$7,463,500
O $9,212,000
2018
60,200
$570
161,750
$57
62,900
150
$109
150
Total selling and customer-service $2,295,000$2,396,250
costs
Selling and customer-service capacity
cost per customer
$15,300 $15,975
Izzy's Limited produces no defective units but it wants to reduce direct materials
usage per unit of XT15. Manufacturing conversion costs in each year depend on
production capacity defined in terms of XT15 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. Izzy's Limited had 140 customers in 2017
and 145 customers in 2018.
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