Analysis of growth, price-recovery, and productivity components (continuation of Exercise 13-19). Suppose that between 2012 and 2013 the market for Meredith€™s special-purpose machines grew at 3%. All increases in market share (that is, sales increases greater than 3%) are the result of Meredith€™s strategic actions.
In exercise Meredith Corporation makes a special-purpose D4H machine used in the textile industry. Meredith has designed the D4H machine for 2013 to be distinct from its competitors. It has been generally regarded as a superior machine. Meredith presents the following data for the years 2012 and 2013.

REQUIRED
Calculate how much of the change in operating income between 2012 and 2013 is due to industry market-size factors, cost leadership, and product differentiation. How successful has Meredith been in implementing its strategy? Explain.

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2012 2013 210 $42,000 310,000 $8.50 250 S2,000,000 $2,025,000 $8,100 100 customers 95 customers S940,500 $9,900 12 S1,200,000 $1,212,000 S101,000 200 $40,000 300,000 $8.00 250 1. Units of D4IH produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct material cost per kilogram S. Manufacturing capacity (units of D4II) 6. Total conversion costs 7. Conversion cost per unit of capacity 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. S8,000 S1,000,000 Selling and customer-service capacity cost per customer Design staf $10,000 12 12. Total design costs 13. Design cost per employee $100,000