Refer to Exercise 13-30. Assume that in 2016, Dransfield has changed its processes and trained workers to recognize quality problems and fix them before products are finished and shipped to customers. Quality is now at an acceptable level. Cost per kilogram of materials is about the same as before, but conversion costs are higher, and Dransfield has raised its selling price in line with the market. Sales have increased and returns have decreased. Dransfield's managers attribute this to higher quality and a price that is still less than Yorunt's. Information about the current period (2016) and last period (2015) follows.

Conversion costs in each year depend on production capacity defined in terms of ZP98 units that can be produced, not the actual units produced. Selling and customer-service costs depend on the number of customers that Dransfield can support, not the actual number of customers it serves. Dransfield has 50 customers in 2015 and 60 customers in 2016. At the start of each year, management uses its discretion to determine the number of advertising staff for the year. Advertising staff and its costs have no direct relationship with the quantity of ZP98 units produced and sold or the number of customers who buy ZP98.
Required
1. Calculate the change in operating income of Dransfield Company for 2015 and 2016.
2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2015 to 2016.
3. Comment on your answer in requirement 2. What do these components indicate?

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2015 016 5,000 500 4,500 1a. Units of ZP98 produced and sold 1b. Units of ZP98 returned 1c. Net sales in units 2. Selling price 3. Direct materials (kilograms) used 4. Direct materials cost per kilogram 5. Manufacturing capacity in units of ZP98 6. Total conversion costs 7. Conversion cost per unit of capacity 8. Selling and customer-service capacity 9. Total selling and customer-service co 10. Selling and customer-service capacity cost per customer 11. Advertising staff 12. Total advertising costs 13. Advertising cost per employee 6,250 225 6,025 $50 3,125 2,500 8,000 $128,000 8,000 184,000 S23 60 customers S4,180 S69.67 60 customers $4,000 66.67 sts $20,000 $20,000 24,000 24,000