PLEASE DO STEP BY STEP CALCULATIONS

Conversion costs in each year depend on production capacity defined in terms of ZP98 units that can be produced, not the actual units produced. Selling and customer-service costs depend on the number of customers that Danny can support, not the actual number of customers it serves. Danny has 65 customers in 2021 and 75 customers in 2022. At the start of each year, management uses its discretion to determine the number of advertising staff for the year. Advertising staff and its costs have no direct relationship with the quantity of ZP98 units produced and sold or the number of customers who buy ZP98.

Danny Company manufactures an electronic component, ZP98. This component is significantly less expensive than similar products sold by Danny's competitors. Order-processing time is very short, however, approximately 10% of products are defective and returned by the customer. Returns and refunds are handled promptly. Yarmouth Manufacturing, Danny's main competitor, has a higher-priced product with almost no defects but a longer order-processing time. Assume that in 2022, Danny has changed its processes and trained workers to recognize quality problems and fix them before products are finished and shipped to customers. Quality is now at an acceptable level. Cost per kilogram of materials is about the same as before, but conversion costs are higher, and Danny has raised its selling price in line with the market. Sales have increased and returns have decreased. Danny's managers attribute this to higher quality and a price that is still less than Yarmouth's. Information about the current period (2022) and last period (2021) follows. (Click the icon to view the data.) (Click the icon to view the additional information.) Required 1. Calculate the change in operating income of Danny Company in 2021 and 2022 . 2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2021 to 2022 . 3. Comment on your answer in requirement 2. What do these components indicate? Yarmouth's. Information about the current period (2022) and last period (2021) follows. (Click the icon to view the data.) (Click the icon to view the additional information.) tronic comnonent 7P98 This comnonent is sianificantlv less exnensive than similar nroducts sold bv Dannv's competitors. Order-processing time is very short; hg, Danny's main competitor, has a Data table rkers to recognize quality problems and fix pefore, but conversion costs are higher, and uality and a price that is still less than Danny Company manufactures an electronic component, ZP98. This component is significantly less expensive than similar products sold by Danny's competitors. Order-processing time is very short, however, approximately 10% of products are defective and returned by the customer. Returns and refunds are handled promptly. Yarmouth Manufacturing, Danny's main competitor, has a higher-priced product with almost no defects but a longer order-processing time. Assume that in 2022, Danny has changed its processes and trained workers to recognize quality problems and fix them before products are finished and shipped to customers. Quality is now at an acceptable level. Cost per kilogram of materials is about the same as before, but conversion costs are higher, and Danny has raised its selling price in line with the market. Sales have increased and returns have decreased. Danny's managers attribute this to higher quality and a price that is still less than Yarmouth's. Information about the current period (2022) and last period (2021) follows. (Click the icon to view the data.) (Click the icon to view the additional information.) Required 1. Calculate the change in operating income of Danny Company in 2021 and 2022 . 2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2021 to 2022 . 3. Comment on your answer in requirement 2. What do these components indicate? Yarmouth's. Information about the current period (2022) and last period (2021) follows. (Click the icon to view the data.) (Click the icon to view the additional information.) tronic comnonent 7P98 This comnonent is sianificantlv less exnensive than similar nroducts sold bv Dannv's competitors. Order-processing time is very short; hg, Danny's main competitor, has a Data table rkers to recognize quality problems and fix pefore, but conversion costs are higher, and uality and a price that is still less than