Metro Corporation makes a special-purpose machine called "OM" used in the textile industry. Metro has designed the OM machine for 20X3 to be distinct from its competitors with a premium price. It has been regarded as a superior machine. The company presents the following data for the years 20X2 and 20X3. 1. Units of OM produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct materials cost per kilogram 20X2 20X3 200 P40,000 300,000 210 P42,000 310,000 P8 P8.50 250 5. 6. 7. Manufacturing capacity in units of an OM Total conversion costs Conversion costs per unit of capacity 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. Selling and customer-service capacity cost per customer 11. Design staff 12. Total design costs 13. Design costs per employee P2,000,000 P8,000 100 customers P1,000,000 P10,000 250 P2,025,000 P8,100. 95 customers P940,500 12 P9,900 12 P1,200,000 P100,000 P1,212,000 P101,000 Metro produces no defective machines, but it desires to reduce direct materials usage per OM machine in 20X2. Conversion costs in each year depending on production capacity defined in terms of OM units that can be produced, not the actual units of OM produced. Selling and customer-service costs depend on the number of customers that Metro can support, not the actual number of customers the company serves. Metro has 75 customers in 20X2 and 80 customers in 20X3. At the start of each year, management uses its discretion to determine the number of design staff for the year. The design staff and costs have no direct relationship with the quantity of OM produced or the number of customers to whom OM is sold. Requirements. 1. Decide and justify if Metro's strategy is product differentiation or cost leadership. 2. Identify applicable key performance objectives and/or measures for the balanced scorecard of Metro Corporation. Explain briefly how your cited objectives/ measures can affect the financial performance of the company. 3. Calculate the operating income of Metro Corporation in 20X2 and 20X3. 4. Compute for the revenue effect and cost effects of the growth component. Assuming that the direct materials costs that would be required in 20X3 to produce 210 units instead of the 200 units in 20X2, assuming the 20X2 input-output relationship continued into 20X3, equal 315,000 kilograms. Manufacturing, conversion, design, selling, and customer-service costs remain the same. 5. Solve the revenue effect and cost effects of the price-recovery component. 6. Calculate the productivity component that explains the change in operating income from 20X2 and 20X3. 7. Provide an analysis of operating income using the provided table. Indicate whether computed amounts are favorable or unfavorable to the company. Then, briefly explain the impact of Metro's. change in operating income with its strategy. Revenues Costs Operating Income Income statement. amounts: 20X2 (1) Revenue and cost effects of growth component: 20X3 (2) Revenue and cost effects of price- recovery component: 20X3 (3) The cost effect of Income productivity component: 20X3 statement amounts: 20X3 (4) 1+2+3+4= (5) Income statement amounts in 20X3 - Income statement amounts in 20X2 = Change in operating income