Refer to Exercise 14- 18.

Required
1. Calculate the operating income of Melissa Corporation in 2011 and 2012.

2. Calculate the growth, price- recovery, and productivity components that explain the change in operating income from 2011 to 2012.

3. Comment on your answer in requirement 2. What do these components indicate?

2011 2012 1. Units of D4H produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct material cost per kilogram 5. Manufacturing capacity in units of D4H 6. Total conversion costs 7. Conversion cost per unit of capacity (row 6 + row 5) 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. Selling and customer-service capacity cost per 290 $38,000 290,000 $8.25 300 $2,175,000 $7,250 5 customers 120 customers $1,164,000 $9,700 270 $36,000 285,000 $8.00 300 $2,100,000 $7,000 $1,225,000 $9,800 customer (row 9 row 8)