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HAND IN 13-18 through 13-22 13-18 STRATEGY, BALANCED SCORECARD. Grey Corporation makes a special-purpose D4H machine used in the textile industry. Grey has designed the DAH machine for 2018 to be distinct from its competitors. It has been generally regarded as a superior machine. Grey presents the following data for the years 2018 and 2019.2018 2019 1. Units of D4H produced and sold 200 210 2. Selling price $40,000 $42,000 3. Direct materials (kilograms) 300,000 310,000 4. Direct material cost per kilogram $8.00 $8.50 5. Manufacturing capacity (units of D4H) 250 250 6. Total conversion costs $2,000,000 $2,025,000 7. Conversion cost per unit of capacity $8,000 $8,100 8. Selling and customer-service capacity 100 customers 95 customers 9. Total selling and customer-service costs $1,000,000 $940,500 10. Selling and customer-service capacity cost per customer $10,000 59,900 11. Design staff 12 12 12. Total design costs $1,200,000 $1,212,000 13. Design cost per employee $100,000 $101,00013-20 ANALYSIS OF GROWTH, PRICE-RECOVERY, AND PRODUCTIVITY COMPONENTS (continuation of Exercise 13-19 0). Suppose that between 2018 and 2019 the market for Grey's special- purpose machines grew at 3%. All increases in market share (that is, sales increases greater than 3 % ) are the result of Grey's strategic actions. LOS Change in operating income from industry market-size factor, $168,000 F Required 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 Grey been in implementing its strategy? Explain.Grey produces no defective machines, but it wants to reduce direct materials usage per DAH machine in 2019. Manufacturing conversion costs in each year depend on production capacity defined in terms of DAH units that can be produced, not the actual units of DAH produced. Selling and customer-service costs depend on the number of customers that Grey can support, not the actual number of customers Grey serves. Grey has 75 customers in 2018 and 80 customers in 2019. 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 D4H produced or the number of customers to whom D4H is sold. Required 1. Is Grey's strategy one of product differentiation or cost leadership? Explain briefly. 2. Describe briefly key elements that you would include in Grey's BSC and the reasons for doing so. 13-19 STRATEGIC ANALYSIS OF OPERATING INCOME. Refer to the information in Exercise 13- 180 LO 4 1. Change in operating income, $607,500 F Required 1. Calculate the change in operating income of Grey Corporation in 2018 and 2019, 2. Calculate the growth, price-recovery, and productivity components of changes in operating income between 2018 and 2019. 3. Comment on your answer in requirement 2. What do these components indicate
