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wrote...
A year ago
Trusted Products Company makes a household appliance with model number L800. The goal for 2018 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 2017 to 2018. The following additional data are available for 2017 and 2018:

20172018
Units of L800 produced and sold33,00037,950
Selling price$360$345
Direct materials (square feet)90,00087,000
Direct material costs per square foot$31$33
Manufacturing capacity for L800 (units)41,25039,850
Total conversion costs$866,250$836,850
Conversion costs per unit of capacity$29$29

What is the revenue effect of the growth component?
A) $1,782,000 U
B) $418,500 F
C) $418,500 U
D) $1,782,000 F
Textbook 
Cost Accounting: A Managerial Emphasis
Edition: 16th
Authors:
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Answer verified by a subject expert
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Posts: 155
A year ago
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 D
Explanation:  Revenue effect of the growth component = (37,950 - 33,000)  $360 = $1,782,000 F
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hkk
wrote...
A year ago
I'm still confused, but thanks for answering correctly
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