Strategic analysis of operating income (continuation of 12-21). Refer to Exercise 12-21.Calculate Gianni‘s operating income in both 2016 and 2017.Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2016 to 2017.Comment on your answers in requirement 2. What does each of these components indicate? Reference:Strategy, balanced scorecard, merchandising operation. Gianni & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Gianni wants to be known for its trendsetting designs, and it wants every teenager to be seen in a distinctive Gianni T-shirt. Gianni presents the following data for its first two years of operations, 2016 and 2017. 201620171. Number of T-shirts purchased215,000245,000Number of T-shirts discarded2.15,00020,0003. Number of T-shirts sold (row 1 – row 2)200,000225,0004. Average selling price5. Average cost per T-shirt6. Administrative capacity (number of customers)7. Administrative costs8. Administrative cost per customer (row 7 ÷ row 6)2$30.0031.0015.0013.004,2504,500$1,633,500$1,593,7502$375363 Administrative costs depend on the number of customers Gianni has created capacity to support, not on theactual number of customers served. Gianni had 3,600 customers in 2016 and 3,500 customers in 2017.1. Is Gianni's strategy one of product differentiation or cost leadership? Explain briefly.2. Describe briefly the key measures Gianni should include in its balanced scorecard and the reasons fordoing so.Required

Answered: 2016 2017 1. Number of T-shirts…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Strategic analysis of operating income (continuation of 12-21). Refer to Exercise 12-21.

Calculate Gianni‘s operating income in both 2016 and 2017.
Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2016 to 2017.
Comment on your answers in requirement 2. What does each of these components indicate? Reference:

Strategy, balanced scorecard, merchandising operation. Gianni & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Gianni wants to be known for its trendsetting designs, and it wants every teenager to be seen in a distinctive Gianni T-shirt. Gianni presents the following data for its first two years of operations, 2016 and 2017.

2016
2017
1. Number of T-shirts purchased
215,000
245,000
Number of T-shirts discarded
2.
15,000
20,000
3. Number of T-shirts sold (row 1 – row 2)
200,000
225,000
4. Average selling price
5. Average cost per T-shirt
6. Administrative capacity (number of customers)
7. Administrative costs
8. Administrative cost per customer (row 7 ÷ row 6)
2$
30.00
31.00
15.00
13.00
4,250
4,500
$1,633,500
$1,593,750
2$
375
363

Administrative costs depend on the number of customers Gianni has created capacity to support, not on the
actual number of customers served. Gianni had 3,600 customers in 2016 and 3,500 customers in 2017.
1. Is Gianni's strategy one of product differentiation or cost leadership? Explain briefly.
2. Describe briefly the key measures Gianni should include in its balanced scorecard and the reasons for
doing so.
Required

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 10 steps with 9 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions