=+15-17 KK Analysis of growth, price-recovery and productivity components (continuation of 15-16)

OBJECTIVE 4 An analysis of Corrugation’s operating profit changes between 2014 and 2015 shows the following:

Operating profit for 2014 $1 850 000 Add growth component 85 000 Deduct price-recovery component (72 000)

Add productivity component 150 000 Operating profit for 2015 $2 013 000 The industry market size for corrugated cardboard boxes did not grow in 2015, input prices did not change and Corrugation reduced the prices of its boxes.

Required 1 Was Corrugation’s gain in operating profit in 2015 consistent with the strategy you identified in requirement 1 of Exercise 15-16?