An analysis of RT Sports operating- income changes between 2012 and 2013 shows the following: Operating income
Question:
Operating income for 2012 .......... $ 2,350,000
Add growth component........... 95,000
Deduct price- recovery component ...... (87,000)
Add productivity component.......... 225,000
Operating income for 2013 ......... $ 2,583,000
The industry market size for insulated coolers did not grow in 2013, input prices did not change, and RT Sports reduced the prices of its coolers.
Required
1. Was RT Sports’ gain in operating income in 2013 consistent with the strategy you identified in requirement 1 of Exercise 14- 11?
2. Explain the productivity component. In general, does it represent savings in only variable costs, only fixed costs, or both variable and fixed costs?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Managerial Accounting Decision Making and Motivating Performance
ISBN: 978-0137024872
1st edition
Authors: Srikant M. Datar, Madhav V. Rajan
Question Posted: