13-35 Analysis of growth, price-recovery, and productivity components (continuation of 13-34). Suppose that during 2020, the market for hoverboards increased by 25%. All increases in market share (that is, sales increases greater than 25%) and decreases in the selling price of HOV-X are the result of XBlasts strategic actions.

Calculate how much of the change in operating income from 2019 to 2020 is due to the industry-market-size factor, product differentiation, and cost leadership. How does this relate to XBlasts strategy and its success in implementation? Explain.

13-34 Strategic analysis of operating income. XBlast manufactures an entry-level hoverboard, HOV-X. Pursuing a cost-leadership strategy, the company has tried to improve quality and reduce costs. As a result of the actions taken over the last year, quality has signific antly improved in 2020 while rework and unit costs of the HOV-X have decreased. XBlast has reduced manufacturing capacity because capacity is no longer needed to support rework. XBlast has also lowered HOV-X's selling price to gain market share and unit sales have increased. Information about the current period (2020) and last period (2019) follows: "A kit is composed of all the major components needed to produce a hoverboard. Conversion costs in each year depend on production capacity defined in terms of kits that can be processed, not the actual kits started. Selling and customer-service costs depend on the number of customers that XBlast can support, not the actual number of customers it serves. XBlast has 125 customers in 2019 and 150 customers in 2020 . 1. Calculate operating income of XBlast for 2019 and 2020. 2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2019 to 2020. 3. Comment on your answer in requirement 2 . What do these components indicate? 13-35 Analysis of growth, price-recovery, and productivity components (continuation of 13-34). Suppose that during 2020 , the market for hoverboards increased by 25%. All increases in market share (that is, sales increases greater than 25% ) and decreases in the selling price of HOV-X are the result of XBlast's strategic actions. Calculate how much of the change in operating income from 2019 to 2020 is due to the industry-market-size factor, product differentiation, and cost leadership. How does this relate to XBlast's strategy and its success in implementation? Explain