Refer to Exercise 12- 18.

In Exercise 12- 18, Ramiro & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Ramiro wants to be known for its trendsetting designs, and it wants every teenager to be seen in a distinctive Ramiro T-shirt. Ramiro presents the following data for its first two years of operations, 2012 and 2013.

Required
1. Calculate Ramiro‘s operating income in both 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 answers in requirement 2. What does each of these componentsindicate?

Transcribed Image Text:

2012 2013 25,500 257,000 24,000 233,000 $ 3200 33.00 S 17.00 15.00 4,450 $1,739000 $1,691,000 8 Administrative cost per customer (row 8+row7) 370 380 1 Number of T-shirts purchased 2 Number of T-shirts discarded 3 Number of T-shirts sold (row1 (row 2) 4 Average selling price 5 Average cost per T-shirt 6 Administrative capacity (number of customers) 7 Administrative costs 20,500 205,000 4,700