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question archive Mason Corporation makes a? special-purpose machine, ? to be distinct from its competitors

Mason Corporation makes a? special-purpose machine, ? to be distinct from its competitors

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Mason Corporation makes a? special-purpose machine, ? to be distinct from its competitors. It has been generally regarded as a superior machine. Mason D4H, used in the textile industry. has designed the D4H machine for 2013 to be distinct from its competitors. It has been generally regarded as a superior machine. Mason presents the following data for 2012 and 2013.

Mason produces no defective? machines, but it wants to reduce direct materials usage per D4H machine in 2013. Conversion costs in each year depend on production capacity defined in terms of D4H units that can be? produced, not the actual units produced. Selling and? customer-service costs depend on the number of customers that Mason can? support, not the actual number of customers it serves. Mason has 75 customers in 2012 and 82 customers in 2013.

                                                                                                                             2012               2013

1.

Units of D4H produced and sold

225

240

2.

Selling price

$45,000

$47,000

3.

Direct materials (kilograms)

300,000

310,000

4.

Direct material cost per kilogram

$8.25

$8.50

5.

Manufacturing capacity in units of D4H

250

250

6.

Total conversion costs

$2,062,500

$2,100,000

7.

Conversion cost per unit of capacity (row 6 / row 5)

$8,250

$8,400

8.

Selling and customer-service capacity

120 customers

115 customers

9.

Total selling and customer-service costs

$1,200,000

$1,127,000

10.

Selling and customer-service capacity per customer (row 9 / row 8)

$10,000

$9,800

Requirements

1. Calculate the operating income of Mason Corporation in 2012 and 2013.

2. Calculate the? growth, price-recovery, and productivity components that explain the change in operating income from 2012 to 2013.

3. Comment on your answer in requirement 2. What do these components? indicate?

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