An IT consulting and services company specializing in the development and implementation of sales management software....

 

Transcribed Image Text:

An IT consulting and services company specializing in the development and implementation of sales management software. The market is subject to stiff competition. To compete, the company must provide quality services while reducing costs. It invoices its customers for work units, the number of which depends on the size and complexity of the sales management system. The company is providing you with the following information for fiscal years 2011 and 2012. Elements 2011 120 2012 1-Number of work units performed 140 2-Selling price (per work unit) 3- Software implementation hours 4-Cost per hour of implementation 5-Software implementation assistance capacity (in 180 work units) 6-Total cost of software implementation assistance 7-Unit cost of assistance capacity to the implementation of $ 4,000 software, per unit of work (7-6/5) 8-Number of IT specialists working on software development 3 9-Total cost of software development 10- Unit cost per software development (10-9/8) $ 100,000 $ 96,000 60,000 $ 120 64,000 $ 126 $ 180,720,000 738,000% $4,100 $3,750,000 $ 780,000 $ 250,000 $ 260,000 Software implementation hours are variable costs. Work to be done: 1-Is this strategy based on differentiation or on cost domination? Explain the answer. 2- Calculate the operating income of the company for 2011 and 2012. 3-Calculate the growth, unit margin and productivity components which explain the variation in operating income between 2011 and 2012. 4- Has the company been able to achieve its strategy? Detail the answer. An IT consulting and services company specializing in the development and implementation of sales management software. The market is subject to stiff competition. To compete, the company must provide quality services while reducing costs. It invoices its customers for work units, the number of which depends on the size and complexity of the sales management system. The company is providing you with the following information for fiscal years 2011 and 2012. Elements 2011 120 2012 1-Number of work units performed 140 2-Selling price (per work unit) 3- Software implementation hours 4-Cost per hour of implementation 5-Software implementation assistance capacity (in 180 work units) 6-Total cost of software implementation assistance 7-Unit cost of assistance capacity to the implementation of $ 4,000 software, per unit of work (7-6/5) 8-Number of IT specialists working on software development 3 9-Total cost of software development 10- Unit cost per software development (10-9/8) $ 100,000 $ 96,000 60,000 $ 120 64,000 $ 126 $ 180,720,000 738,000% $4,100 $3,750,000 $ 780,000 $ 250,000 $ 260,000 Software implementation hours are variable costs. Work to be done: 1-Is this strategy based on differentiation or on cost domination? Explain the answer. 2- Calculate the operating income of the company for 2011 and 2012. 3-Calculate the growth, unit margin and productivity components which explain the variation in operating income between 2011 and 2012. 4- Has the company been able to achieve its strategy? Detail the answer.

Answer rating: 100% (QA)

1 The company is focusing on differentiation as it is trying to provide quality services while reduc... View the full answer