Ceteris Computers,a manufacture of computer monitors has the following data in its accounting records:

20182019

Sales-Units40,00042,000

Sellingprice$100$110

Direct materials -kilos120,000123,000

-Cost/kilo$10$11

Manufacturing capacity - units

50,00050,000

Conversioncosts$1,000,000$1,100,000

Conversion cost/unit of capacity:

$20$22

Sales/Service: Customer capacity:

3029

Sales/Servicecosts$720,000$725,000

Sales/Servicecost/customer$24,000$25,000

-Ceteris has been able to maintain zero defects, the current focus is on gaining greater efficiency in material usage by reducing material usage per unit

-Conversion costs depend on production capacity defined in terms of units produced

• Selling and customer-service costs depend on number of customers the Customer and Service functions are designed to support
• There were 23 customers in 2019 and 25 in 2018

-The industry has grown 5% in the period

Following are the comparative results of the company's operation for the two years:

$00020182019

Revenues$4,000$4,620

Costs: Directmaterials1,2001,353

Conversioncosts1,0001,100

Selling/customercosts720725

OperatingIncome$1,080$1,442

IncomeRevenue/Revenue/CostIncome

StatementCosteffectCosteffectEffect ofStatement

AmountsofgrowthPrice/RecoveryProductivityAmounts

20182019

Revenue$4,000$$$-$4,620

Costs2,9203,178

Op. Income$1,080$140F$164F$58F$1,442

Required:

1. Whattype of strategy is Ceteris is pursuing? Comment on its success, give

reasons for your answer using results of the following analysis.

Perform a brief ("thumbnail")analysis of the year over year changes in cost and

capacity before the more in depth financial analysis required in Part 2 of the

question; make notes on your findings

2.Analyse each ofthe following:

The growth Component

The Price-Recovery Component

The Productivity Component

Explainseparately, the effect of each component

3.After you have completed the above analysis,use the Balanced Scorecard for

Ceteris,show how the company can use the elements of the BSCto explain the

outcomes, using both appropriate financial and non-financialinformation