Marlin Company manufactures a DVD player called Orlicon. The company sells the player to discount stores throughout the country. (Click the icon to view additional information.) Information about the current period (2017) and last period (2016) follows. (Click the icon to view the information for 2017 and 2016.) GE Suppose that during 2017, the market for DVD players grew 15%. All increases in market share (that is, sales increases greater than 15%) and decreases in the selling price of the Orlicon are the result of Marlin's strategic actions. (Click the icon to view additional information.) E (Click the icon to view operating income for 2016 and 2017.) (Click the icon to view the components to explain changes in operating income.) Dond the marrirament First, calculate how much of the change in operating income from 2016 to 2017 is due to the industry-market-size factor, product differentiation, and cost leadership. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar.) Change due to industry market-size Change due to product differentiation Change due to cost leadership Change in operating income How does this relate to Marlin's strategy and its success in implementation? Explain. Marlin successful in implementing its strategy. The in operating income during 2017 was due to It its prices to gain market share that might also benefit it in future periods. Marlin's change in operating income by a growth in the overall market size. in 2017 was Data table 2016 2017 18,000 21,000 $ 98 $ 84 15,000 7,000 1. Units of Orlicon produced and sold 2. Selling price 3. Direct materials used (kits*) 4. Direct material cost per kit* 5. Manufacturing capacity in kits processed 6. Total conversion costs 29 $ 29 32,000 23,000 $ 608,000 $ 437,000 $ 7. Conversion cost per unit of capacity (row 6 + row 5) 19 $ 19 8. Selling and customer-service capacity 94 customers 94 customers 9. Total selling and customer-service costs $ 12,220 $ 21,620 10. Selling and customer-service capacity per customer (row 9 = row 8) $ 130 230 * A kit is composed of all the major components needed to produce a DVD player. Data table 2016 2017 Revenues $ 1,764,000 $ 1,764,000 Costs Direct material costs 435,000 203,000 Manufacturing conversion costs Selling and customer service costs 608,000 12,220 437,000 21,620 Total costs 1,055,220 661,620 $ 708,780 $ 1,102,380 Operating income Marlin has calculated the following growth, price-recovery, and productivity components that explain the change in operating income from 2016 to 2017: Revenue effect of growth $ F 294,000 72,500 Cost effect of growth U $ 221,500 Change in operating income due to growth F Revenue effect of price recovery $ U 294,000 9,400 Cost effect of price recovery U 303,400 Change in operating income due to price rec ry U Direct material costs $ 304,500 F Conversion costs 171,000 F 0 Selling and customer-service costs $ 475,500 Change in operating income due to productivity F
