An Analysis of Didgeridoo Corporation's Operating Profit Changes Between 2017

question 83

Essay

An analysis of Didgeridoo Corporation's operating profit changes between 2017 and 2018 show the following:
$$\begin{array} { l r } \text { Operating profit for } 2017 & \$ 1000000 \\\text { Add growth component } & 30000 \\\text { Add price-recovery component } & 200000 \\\text { Deduct prod uctivity component } & ( 10000 ) \\\text { Operating profit for } 2018 & \$ 1220000\end{array}$$
Required:
Is Didgeridoo's operating profit gain consistent with the product differentiation or cost leadership strategy? Explain briefly.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

---

Definitions:

Tax Deductible

Expenses that can be subtracted from gross income to reduce taxable income, effectively lowering the overall tax liability.

Tax Purposes

The reason or objective behind the implementation of taxes or certain tax guidelines, often related to income, business expenses, and investments.

Capital Gain

The profit earned from the sale of assets like stocks, bonds, or real estate, which exceeds the purchase price.

Book Value

For a company, the value of equity, equal to total assets minus total liabilities. Book value can be stated in total or per share. For an asset, book value is the net of original cost minus accumulated depreciation, and is generally referred to as net book value.