Solve the questions with the help of the data given below:

Type of Data	2015	2016
Units of AIIPad produced and sold	800	900
Selling price	$450	$430
Pounds of direct material used	3,200	3,300
Direct material cost per pound	$35	$35
Manufacturing capacity in units	12,000	11,000
Total conversion costs	$1,800,000	$1,650,000
Conversion cost per unit of capacity	$150	$150
Selling and customer service capacity	customers	90 customers
Total selling and customer service costs	$495,000	$495,000
Selling and customer service capacity cost and customer	$500	$550

Assuming Titan had 70 customers in 2015 and 80 customers in 2016,

1. 1. Calculate the operating income of Titan for 2015 and 2016;

Particulars                                                                   2015                                         2016

Revenue; 800*450;900*430                                   360,000                                 387,000

Direct Material Cost 3200*35;3300*35                112,000                                 115,500

Conversion Cost                                                      1,800,000                               1,650,000

Selling and Customer Service cost                         495,000                                   495,000

Total Cost                                                              2,407,000                                     2,260,500

Profit/Loss                                                            (2,047,000)                                 (1,873,500)

Suppose that during 2016, the overall market for AllPads grew 3%. The decrease in the selling price of the AllPad and increase in market share (that is, sales increase greater than 3%) are the result of Titan’s strategic actions.

2. Calculate the amount and cost of unused manufacturing capacity and unused selling and customer service capacity at the beginning of 2016 based on actual production and the actual number of customers served in 2016.

1. 3. Calculate how much of the change in operating income from 2015 to 2016 is due to the industry market size factor, product differentiation, and cost leadership. How does this relate to Titan’s strategy and its success in implementation? Explain.

Answer rating: 100% (QA)

Step 1 Operating Income After deducting operating expenses such ... View the full answer