An analysis of Pineway's operating$-$income changes between $2019$ and $2020$ shows the following

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The industry market size for electric motors did not grow in $2020,$ input prices did not change, and Pineway reduced the prices of its motors.

Read the requirements.

Requirement $1.$ Was Pineway's gain in operating income in $2020$ consistent with a cost leadership strategy?

Pineway's operating income gain is $,$ with a cost leadership strategy. The increase in operating income in $2020$ was driven by the $2020.$ Pineway took advantage of this diving factor to reduce the prices of its motors and to fuel growth. It market share by growing even though the total market size wa unchanged.

Requirement $2.$ Explain the productivity component. In general, does it represent savings in only variable costs, anly fixed casts, or both variable and fixed cosis$?$

Select the corect delinition for the productivity component:

A$.$ It measures the change in operating income attributable solely to changes in the prices of inputs and outputs between the previous year and the current year. It measures the change in output price compared with changes in input prices.

B$.$ It measures the change in costs atributable to a change in the quantity and mix of inputs used in a year relative to the quantity and mix of inputs that would have been used in a previous year to produce the current year output. It measures the amount by which operating income increases and costs decrease through the productive use of input quantities.

C$.$ It measures the change in operating income attibutable solely to the change in the quantity of output sold between the previous year and the current year.

The productivity component represents savings in $$

With respect to variable cosis$,$ productivity improvements into cost savings. In the case of fixed costs, productivity gains $$

$4$

management takes actions to reduce unused capacity.

Data table

Operating income for $2019$

Add growth component

Deduct price$-$recovery component

Add productivity component

Operating income for $2020$