https://www.chegg.com/homework-help/questions-and-answers/sunway-corporation-small-information-system-consulting-firm-specializes-helping-companies--q95542482

Sunway Corporation is a small information systems consulting firm that specializes in helping companies implement sales management software. The market for 's products is very competitive. To compete, must deliver quality service at a low cost. bills clients in terms of units of work performed,

which depends on the size and complexity of the sales management system. Sunway presents the following data for the years 2018 and 2019 .

2018

2019

1

Units of work performed

80

90

2

Selling price

$49,000

$47,000

3

Software implementation labour-hours

29,000

31,500

4

Cost per software implementation labour-hour

$65

$66

5

Software implementation support capacity (units of work)

95

95

6

Total cost of software implementation support

$408,500

$418,000

7

Software implementation support capacity cost per unit of work

$4,300

$4,400

8

Number of employees doing software development

6

6

9

Total software development costs

$870,000

$900,000

10

Software development cost per employee

$145,000

$150,000

The company has chosen a cost leadership strategy. The growth, price-recovery, and productivity components of the change in operating income from to are as follows:

Revenue effect of growth

$490,000

F

Cost effect of growth

235,625

U

Change in operating income due to growth

$254,375

F

Revenue effect of price-recovery

$180,000

U

Cost effect of price-recovery

72,125

U

Change in operating income due to price-recovery

$252,125

U

Change in operating income due to productivity

$74,250

F

Calculate how much of the change in operating income between 2018 and 2019 is due to industry market-size factors, cost leadership, and product differentiation. How successful has Sunway been in implementing its strategy?