Trusted Products Company manufactures a household appliance model number L800. The 2018 goal is to reduce direct
Question:
Trusted Products Company manufactures a household appliance model number L800. The 2018 goal is to reduce direct material usage per unit. The defective unit is not currently manufactured. Production conversion costs are based on production capacity, defined in L800 units that can be produced. The industry market size for home appliances increased by 2% from 2017 to 2018. The following additional data are available for 2017 and 2018:
2017 2018
L800 units produced and sold 31,000 31,620
Sale price 310$ 290$
Direct materials (square feet) 98,000 96,500
Direct material costs per square meter $34 $36
Production capacity for L800 (units) 38,750 37,350
Total conversion cost $1,162,500 $1,120,500
Conversion cost per unit of capacity $30 $30
Overall, was Trusted Products' strategy successful in 2018?
Expert Answer:
To determine if Trusted Products strategy was successful in 2018 we need to analyze the changes in t... View the full answer
