(Solved) Cobalt Company makes a household appliance with model number X500. The goal for 2015 is to improve p

Cobalt Company makes a household appliance with model number X500. The goal for 2015 is to improve product design and outlook. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of X500 units that can be produced. The industry market size for appliances increased 10% from 2014 to 2015. The following additional data are available for 2014 and 2015:

   2014   2015
   Units of X500 produced and sold   20,000   20,000
   Selling price   $150   $170
   Direct materials (square feet)   30,000   32,500
   Direct material costs per square foot   $10   $10
   Manufacturing capacity for X500 (units)   20,500   20,500
   Total conversion costs   $451,000   $493,250
   Conversion costs per unit of capacity   $22   $22.5

Out of the two basic strategies, Cobalt's strategy is ________.
A) product differentiation because Cobalt is able to produce a given quantity of output with a lower cost of inputs
B) cost leadership because Cobalt is able to produce a given quantity of output with a lower cost of inputs
C) cost leadership because Cobalt is able to increase its output price faster than the increase in its input prices
D) product differentiation because Cobalt is able to increase its output price faster than the increase in its input prices

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Cobalt Company makes a household appliance with model number X500. The goal for 2015 is to improve p

Cost Accounting

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