15 Feb Following a strategy of product differentiation, R2D2 Corporation makes a high-end computer monitor, BB8. R2D2 Corporation presents the following data for the years 1 and 2: Units
Following a strategy of product differentiation, R2D2 Corporation makes a high-end computer monitor, BB8. R2D2 Corporation presents the following data for the years 1 and 2:
Units of BB8 produced and sold
5,000
5,500
Selling price
$400
$440
Direct materials (kilograms)
15,000
15,375
Direct materials costs per kilogram
$40
$44
Manufacturing capacity for BB8 (units)
10,000
10,000
Total manufacturing conversion costs
$500,000
$550,000
Manufacturing conversion costs per unit of capacity
$50
$55
Selling and customer-service capacity (customers)
60
58
Total selling and customer-service costs
$180,000
$181,250
Cost per customer of selling & customer-service capacity
$3,000
$3,125
R2D2 Corporation produces no defective units but it wants to reduce direct materials usage per unit of BB8 in Year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of BB8 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs nor customer-service costs are affected by changes in actual volume. R2D2 Corporation has 46 customers in Year 1 and 50 customers in Year 2 . The industry market size for high-end computer monitors increased 5% from Year 1 to Year 2. Of the $40 increase in unit selling price, $10 was attributable to a general increase in prices.
Required
What is the operating income for Year 1?
What is the operating income in Year 2?
What is the change in operating income from Year 1 to Year 2?
What amount is the revenue effect of growth component?
What amount is the cost effect of growth component?
What is the change in operating income as a result of the growth component?
What amount is the revenue effect of price recovery component?
What amount is the cost effect of price recovery component?
What is the change in income as a result of the price recovery component?
What is the amount of the productivity component?
The change in operating income from cost leadership.
The change in operating income due to industry wide effects.
The effect of product differentiation on operating income and a summarization of the change in operating income between Year 1 and Year 2.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.