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

question 33

Essay

Following a strategy of product differentiation,Jitsubishi Corporation makes a high-end flat screen television monitor,TV04.Jitsubishi Corporation presents the following data for the years 2017 and 2018:
$$\begin{array} { l r r } & 2017 & 2018 \\\text { Units of TV04 produced and sold } & 5000 & 5500 \\\text { Selling price } & \$ 400 & \$ 440 \\\text { Direct materials (kilos) } & 15000 & 15375 \\\text { Direct materials costs per kilo } & \$ 40 & \$ 44 \\\text { Manufacturing capacity for TV04 (units) } & 10000 & 10000 \\\text { Conversion costs } & \$ 1000000 & \$ 1100000 \\\text { Conversion costs per unit of capacity } & \$ 100 & \$ 110 \\\text { Selling and customer-service capacity (customers) } & 60 & 58 \\\text { Total selling and customer-service costs } & \$ 360000 & \$ 362500 \\\text { Selling and customer-service capacity cost per customer } & \$ 6000 & \$ 6250\end{array}$$
Jitsubishi Corporation produces no defective units but it wants to reduce direct materials usage per unit of TV04 in 2019.Manufacturing conversion costs in each year depend on production capacity defined in terms of TV04 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.Jitsubishi Corporation has 46 customers in 2017 and 50 customers in 2018.The industry market size for high-end flat screen television monitors increased 5% from 2017 to 2018.
Required:
a.What is operating profit for 2017?
b.What is operating profit in 2018?
c.What is the change in operating profit from 2017 to 2018?
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Definitions:

Accelerated Development

Accelerated development is a strategy or approach that seeks to speed up the process of development and growth, often through intensified efforts or the use of innovative techniques.

Product Formulation

The process of designing the combination of ingredients in a product to achieve desired qualities.

Product Line

A group of related products under a single brand offered by the same company.

Branding

A marketing decision in which an organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them from those of competitors.