Following a Strategy of Product Differentiation, Sting Corporation Makes a High-End

question 39

Essay

Following a strategy of product differentiation, Sting Corporation makes a high-end computer monitor, CM7. Sting Corporation presents the following data for the years 2012 and 2013:
Sting Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM7 in 2013. Manufacturing conversion costs in each year depend on production capacity defined in terms of CM7 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Sting Corporation has 100 customers in 2012 and 115 customers in 2013. The industry market size for high-end computer monitors increased 5% from 2012 to 2013.
Required:
a. What is operating income for 2012?
b. What is operating income in 2013?
c. What is the change in operating income from 2012 to 2013?

---

Definitions:

Pentagon Papers Case

A landmark legal case involving the publication of classified Department of Defense documents that revealed U.S. government secrets related to the Vietnam War.

No-Prior-Restraint Doctrine

A legal principle in constitutional law that prohibits the government from prohibiting speech or publication before the fact, mainly associated with media freedoms.

New York Times v. United States

A landmark Supreme Court case in 1971 that made it possible for the New York Times and Washington Post newspapers to publish the then-classified Pentagon Papers without risk of government censorship or punishment.

Free Exercise Clause

A clause within the First Amendment of the U.S. Constitution that ensures people have the freedom to observe their religious beliefs without hindrance from the government.