Following a strategy of product differentiation,Sting Corporation makes a high-end computer monitor,CM7.Sting Corporation presents the following data for the years 2015 and 2016:
Sting Corporation wants to reduce direct materials usage per unit of CM7 in 2016.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 2015 and 115 customers in 2016.The industry market size for high-end computer monitors increased 5% from 2015 to 2016.
Required:
a.Calculate the effect on the change of operating income as a result of the productivity component.
b.What is the partial productivity ratio for the direct materials for each year? (round to 4 decimal places)Give a plausible underlying reason for what may have caused the ratio to change.
c.What is the total factor productivity for 2016 and the total factor productivity benchmark based on input costs that would have been used in 2015 to produce 2016 output?(round to 4 decimal places)
d.Provide two key success factors,and a corresponding measure for each,that relate to Sting Corporation's internal business process balanced scorecard perspective.
Definitions:
Equilibrium GDP
The gross domestic product level where aggregate supply equals aggregate demand, indicating a stable economy.
Inflationary Gap
A situation where aggregate demand in an economy exceeds aggregate supply, leading to inflation and a higher levels of spending than what is supported by production.
Federal Budget Deficit
The shortfall that occurs when the United States federal government's expenditures exceed its revenues within a fiscal year.
National Debt
The total amount of money that a country's government has borrowed by issuing securities like government bonds.
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