Answer the following questions using the information below:
Wingard Company makes a household appliance with model number X200. The goal for 2012 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 X200 units that can be produced. The industry market size for appliances increased 10% from 2011 to 2012. The following additional data are available for 2011 and 2012:

-Overall, was Wingard's strategy successful for 2012?
A)No, because the selling price per unit decreased.
B)Yes, because operating income increased.
C)Yes, because less direct materials were used.
D)No, because more units were produced and sold.

Question

Answer the following questions using the information below:
Wingard Company makes a household appliance with model number X200. The goal for 2012 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 X200 units that can be produced. The industry market size for appliances increased 10% from 2011 to 2012. The following additional data are available for 2011 and 2012:
 
-Overall, was Wingard's strategy successful for 2012?
A)No, because the selling price per unit decreased. 
B)Yes, because operating income increased. 
C)Yes, because less direct materials were used. 
D)No, because more units were produced and sold.

Quizplus · Accepted Answer

Operating income is a key indicator of a company's profitability. An increase in operating income suggests that the strategy was successful, as it indicates improved financial performance.

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