Refer to Exercise 13-26.

Required
1. Calculate the operating income of Westlake Corporation in 2010 and 2011.
2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2010 to 2011.
3. Comment on your answer in requirement 2. What do these components indicate?

Data From Exercise 13-26:

Westlake Corporation is a small information-systems consulting firm that specializes in helping companies implement standard sales-management software. The market for Westlake’s services is very competitive. To compete successfully, Westlake must deliver quality service at a low cost. Westlake presents the following data for 2010 and 2011.

                                

Software-implementation labor-hour costs are variable costs. Software-implementation support costs for each year depend on the software-implementation support capacity Westlake chooses to maintain each year (that is the number of jobs it can do each year). It does not vary with the actual number of jobs done that year.

Required
1. Is Westlake Corporation’s strategy one of product differentiation or cost leadership?Explain briefly.
2. Describe key measures you would include in Westlake’s balanced scorecard and your reasons for doing so.