Analysis of growth, price-recovery, and productivity components (continuation of 13-16). An analysis of La Quinta’s operating-income changes between 2008 and 2009 shows the following:

The industry market size for corrugated cardboard boxes did not grow in 2009, input prices did not change, and La Quinta reduced the prices of its boxes.

1. Was La Quinta’s gain in operating income in 2009 consistent with the strategy you identified in requirement 1 of Exercise 13-16?

2. Explain the productivity component. In general, does it represent savings in only variable costs, only fixed costs, or both variable and fixed costs?

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Operating income for 2008 $1,700,000 Add growth component Deduct price-recovery component Add productivity component Operating income for 2009 70,000 (60,000) 140,000 $1,850,000