Suppose that during 2013, the market for Stanmore?s special-purpose machines grew by 3%.

In Exercise 12- 22, Stanmore Corporation makes a special- purpose machine, D4H, used in the textile industry. Stanmore has designed the D4H machine for 2013 to be distinct from its competitors. It has been generally regarded as a superior machine. Stanmore presents the following data for 2012 and 2013.

All increases in market share (that is, sales increases greater than 3%) are the result of Stanmore?s strategic actions. Calculate how much of the change in operating income from 2012 to 2013 is due to the industry-market-size factor, product differentiation, and cost leadership. How successful has Stanmore been in implementing its strategy? Explain.

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2012 2013 210 $42,000 310,000 $8.50 200 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 1. 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 customer (row 9 + row 8) $40,000 300,000 $8 250 $2,000,000 $8,000 250 $2,025,000 $8,100 100 customers 95 customers $1,00000 $10,000 $940,500 $9,900