Foley Products Company makes a household appliance with model number X500

Subject:AccountingPrice:4.87 Bought7

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Foley Products Company makes a household appliance with model number X500. 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 X500 units that can be produced. The industry market size for appliances increased 10% from 2017 to 2018.

The following additional data are available for 2017 and 2018

                                                                             2017                                                      2018

Units of X500 produced and sold                      16,000                                                    17,600

Selling price                                                          $140                                                        $133

Direct materials (square feet)                            36,000                                                      35,000

Direct material costs per square foot                      $10                                                           $13

Manufacturing capacity for X500 (units)             12,500                                                     11,800

Total conversion costs                                       $350,000                                                $330,400

Conversion costs per unit of capacity                         $28                                                         $28

 What is operating income for 2017?