1. Calculate lakeside's operating income in both 2018 and 2019.

2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2018 to 2019.

3. Comment on your answers in requirement 2. What do each of these components indicate?

Data from Exercise 13.27

lakeside T-Shirt Company sells a variety of T-shirts. lakeside presents the following data for its first two years of operations, 2018 and 2019. For simplicity, assume that all purchasing and selling costs are included in the average cost per T-shirt and that each customer buys one T-shirt.

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2018 2019 Number of T-shirts purchased 200,000 250,000 Number of T-shirts lost 2,000 3,300 198,000 Number of T-shirts sold 246,700 Average selling price $25.00 $26.00 Average cost per T-shirt $10.00 $8.50 Administrative capacity in terms of number of customers 3,750 4,000 who can be served Administrative costs $1,200,000 $1,162,500 Administrative cost per customer $300 $310 Design staff 5 $250,000 Total design costs $275,000 Design cost per employee $50,000 $55,000