McCarty Associates is a construction engineering firm that prepares detailed construction drawings for single-family homes. The market for this service is very competitive. To compete successfully McCarty must deliver quality service at low cost. McCarty presents the following data for 2016 and 2017 Suppose that during 2017, the market for construction drawing jobs increases by 14%, Assume that any increase in market share more than 14% and any decrease in selling price are the result of strategic choices by McCarty's management to implement its strategy (Click the icon to view the data.) Read the requirement. (Click the icon to view additional information.) Calculate how much of the change in operating income from 2016 to 2017 is due to the industry-market-size factor Begin by selecting the formula you will use. Then enter the amounts and calculate the change in operating income due to the industry-market-size factor. Determine whether the amount has a favorable effect on operating income or unfavorable effect. (Label the variance as favorable (F) or unfavorable (U)) Change in operating income )due to industry-market size x ( x ( Before calculating the change in operating income due to cost leadership, you must calculate the growth in market share due to cost leadership. Begin by selecting the formula you will use. Then enter the amounts and calculate the growth in market share due to cost leadership. Determine whether the amount has a favorable effect on operating income or unfavorable effect. (Label the variance as favorable (F) or unfavorable (U)) Growth in market share )due to cost leadership x ( x ( Now calculate the change in operating income due to cost leadership. Label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. (Label each variance as favorable (F) or unfavorable (U)) Growth in market share due to cost leadership Change in operating income due to cost leadership Next determine the change in operating income due to product differentiation. Determine whether the amount has a favorable effect on operating income or unfavorable effect. (Label the variance as favorable (F) or unfavorable (U)) Change in operating income due to product differentiation Now calculate the change in operating income by entering the appropriate amounts. (Label each variance as favorable (F) or unfavorable (U)) Change in operating income due to industry-market-size Change in operating income due to cost leadership Change in operating income due to product differentiation Total change in operating income McCarty Associates is a construction engineering firm that prepares detailed construction drawings for single-family homes. The market for this service is very competitive. To compete successfully McCarty must deliver quality service at low cost. McCarty presents the following data for 2016 and 2017 Suppose that during 2017, the market for construction drawing jobs increases by 14%, Assume that any increase in market share more than 14% and any decrease in selling price are the result of strategic choices by McCarty's management to implement its strategy (Click the icon to view the data.) Read the requirement. (Click the icon to view additional information.) Calculate how much of the change in operating income from 2016 to 2017 is due to the industry-market-size factor Begin by selecting the formula you will use. Then enter the amounts and calculate the change in operating income due to the industry-market-size factor. Determine whether the amount has a favorable effect on operating income or unfavorable effect. (Label the variance as favorable (F) or unfavorable (U)) Change in operating income )due to industry-market size x ( x ( Before calculating the change in operating income due to cost leadership, you must calculate the growth in market share due to cost leadership. Begin by selecting the formula you will use. Then enter the amounts and calculate the growth in market share due to cost leadership. Determine whether the amount has a favorable effect on operating income or unfavorable effect. (Label the variance as favorable (F) or unfavorable (U)) Growth in market share )due to cost leadership x ( x ( Now calculate the change in operating income due to cost leadership. Label each component as to whether the amount has a favorable effect on operating income or unfavorable effect. (Label each variance as favorable (F) or unfavorable (U)) Growth in market share due to cost leadership Change in operating income due to cost leadership Next determine the change in operating income due to product differentiation. Determine whether the amount has a favorable effect on operating income or unfavorable effect. (Label the variance as favorable (F) or unfavorable (U)) Change in operating income due to product differentiation Now calculate the change in operating income by entering the appropriate amounts. (Label each variance as favorable (F) or unfavorable (U)) Change in operating income due to industry-market-size Change in operating income due to cost leadership Change in operating income due to product differentiation Total change in operating income
