Chapter 12, Problem 12.24E

To determine

The change in operating income from 2016 to 2017 due to growth in market size, product differentiation and cost leadership and whether the company has been successful in implementing the strategy.

Given information:

For the year 2013,

The number of machines sold is 200.

The average selling price is $40,000 per machine.

The number of machines purchased is 300,000.

The direct materials cost per kg is $8.

The conversion cost is $2,000,000.

The selling and customer service cost is $1,000,000.

For the year 2014,

The number of machines sold is 210.

The average selling price is $42,000 per machine.

The number of machines purchased is 310,000.

The direct materials cost per kg is $8.50.

The conversion cost is $2,025,000.

The selling and customer service cost is $940,500.