As a direct result of your committee's work, quality significantly improved during the latest year while costs and rework decreased. Titan Computer Company also reduced manufacturing capacity because of lowered rework support needs. Sales of AllPad have increased in tandem with a decrease in unit price (following the intent to increase market share). Information about the current period (2016) and prior period (2015) follows. Type of Data Units of AIIPad produced and sold Selling price Pounds of direct material used Direct material cost per pound Selling and customer service capacity 2015 800 2016 900 $450 $430 3,200 3,300 $35 $35 90 customers $45,000 (500*90) 90 customers $49,500 (550*90) Total selling and customer service costs Selling and customer service capacity cost and per customer $500 $550 Assuming Titan had 70 customers in 2015 and 80 customers in 2016, 1. calculate the operating income of Titan for 2015 and 2016; 2. calculate the growth, price recovery, and productivity components that explain the change in operating income from 2015 and 2016; and 3. comment on your answer. What do these components indicate? Suppose that during 2016, the overall market for AllPads grew 3%. The decrease in the selling price of the Allpad and increase in market share (that is, sales increases greater than 3%) are the result of Titan's strategic actions. 1. Calculate how much of the change in operating income from 2015 to 2016 is due to the industry market size factor, product differentiation, and cost leadership. How does this relate to Titan's strategy and its success in implementation? Explain. 2. Calculate the amount and cost of unused manufacturing capacity and unused selling and customer service capacity at the beginning of 2016 based on actual production and actual number of customers served in 2016. 3. Suppose Titan can add or reduce its selling and customer service capacity in increments of five customers. What is the maximum amount of cost that Titan could save in 2016 by downsizing its selling and customer service capacity? 4. Titan elects not to eliminate any of its unused selling and customer service capacity. Why might Titan choose not to downsize?