Castleton Company makes a chemical fertilizer, Turfgro. The market for Turfgro is highly competitive. As a result, managing costs is critical for long-run profitability and growth. Information on Turfgro for 2010 and 2011 is as follows: 2010 2011 1. Tons of Turfgro produced and sold 10,000 10,400 2. Selling price per ton $300 $315 3. Direct materials used in tons 11,500 12,000 4. Direct material cost per ton $120 $123 5. Tons of Turfgro manufactured per batch 40 40 6. Manufacturing capacity in batches 350 345 7. Conversion costs $1,050,000 $1,069,500 8. Conversion costs per batch of capacity (row 7 row 6) $3,000 $3,100 9. Number of advertisements run 1,400 1,395 10. Advertising costs $350,000 $351,540 11. Advertising costs per advertisement run (row 10 row 9) $250 $252 Each years conversion costs depend on production capacity (defined in terms of number of batches of Turfgro that can be produced), not the actual number of batches produced. At the start of each year, management uses its discretion in deciding how many advertisements to run for the year. The number of advertisements run has no direct cause-and-effect relationship with the quantity of Turfgro produced and sold. a. Is Castleton using a strategy of product differentiation or cost leadership? Explain briefly. b. Compute the change in operating income from 2010 to 2011. c. Compute the growth, price-recovery, and productivity components of the change in operating income from 2010 to 2011.