Analysis of growth, price-recovery, and productivity components (continuation of 12-...

Analysis of growth, price-recovery, and productivity components (continuation of 12-16). An analysis of Ridgecrest’s operating-income changes between 2012 and 2013 shows the following:

The industry market size for electric motors did not grow in 2013, input prices did not change, and

Ridgecrest reduced the prices of its motors.

1. Was Ridgecrest’s gain in operating income in 2013 consistent with the strategy you identified in requirement

1 of Exercise 12-16?

2. Explain the productivity component. In general, does it represent savings in only variable costs, only

fixed costs, or both variable and fixed costs?