What is the Tiegs Corporation revenue effect of the price

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Question - One of the makeup kit models that Tiegs Corporation produces is targeted at professional women. The goal for Year 2 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 makeup kits that can be produced. The industry market size for makeup kits increased? 5% from Year 1 to Year 2. The following additional data are available for Years 1 and? 2:

 

Year 1

Year 2

Makeup kits produced and sold?

850,000

935,000

Selling price

? $180

$175

Direct materials? (kilograms)

340,000?

364,650

Direct material costs per kilogram

? $50

$52

Manufacturing capacity? (kits)

1,000,000?

1,050,000

Total conversion costs?

$30,000,000

$34,650,000

Conversion costs per unit of capacity?

$30

$33

Required - What is the Tiegs Corporation revenue effect of the price-?recovery?

A. ?$4,250,000 F

B. ?$4,250,000 U

C. ?$4,125,000 U

D. ?$4,675,000 U

E. ?$4,675,000 F

Reference no: EM133044169

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