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Kendrick Company manufactures a DVD player called Orlicon. The company sells the player to discount stores throughout the couA Data Table - X 79 2016 2017 1. Units of Orlicon produced and sold 3,000 7,000 2. Selling price 98 $ 3. Direct materials useA Data Table - X 2017 2016 294,000 $ Revenues $ 553,000 Costs Direct material costs Manufacturing conversion costs 204,000 27A Data Table - X Kendrick has calculated the following growth, price-recovery, and productivity components that explain the c

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Answer #1
Effect of the industry-market-size factor on operating income
Of the 4000-unit increase in sales from 3000 to 7000 units, 15% or 450 (15% x 3000) units is due to growth in market size, and 3550 (4000 - 450 ) units is due to an increase in market share
Change due to industry-market-size = 120,000 x 450/4000 $   13,500.00 F
Change due to product differentiation = 144160 + 120,000 x (4000-450)/4000 $ 250,660.00 F
Change due to cost leadership $ 322,000.00 F
Change in operating income $ 586,160.00 F
Kendrick has been successful in implementing its product differentiation strategy.The increase in operating income during 2017 was due to product differentiation, It increases its price to gain market share also benefit future benefits.Kendrick change in operating income in 2017 was helped by a growth in the overall market
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