Question:Strategic analysis of operating income (continuation of 12-33).Refer to Problem 12-33. As a result of the actions taken, quality has significantly improved in 2017 while rework and unit costs of the Orlicon have decreased. Scott has reduced manufacturing capacity because capacity is no longer needed to support rework. Scott has also lowered the Orlicon's selling price to gain market share and unit sales have increased. Information about the current period (2017) and last period (2016) follows.

2016 201? 1. Units of Drlicon produced and sold 16,000 22,000 2 Selling price $95 $30 3. Direct rn aterials used lkits*l 20,000 22,000 4. Direct rn aterial cost per kit\" $32 $32 5. Manufacturing capacity in kits processed 28,000 25,000 6. Total conversion costs $560,000 $520,000 1. Conversion cost per unit of capacity (row 6 + row 5} $20 $20 0. Selling and customer-service capacity 180 customers 100 customers 5. Total selling and customer-service costs $22,000 $32,400 10. Selling and customer-service capacity cost per customer $150 $180 lrovv 9 + row 8} *A kit is composed of all the major components needed to produce a DUI) player. Conversion costs in each year depend on production capacity delined in terms oi kits that can be pro- cessed, not the actual kits started. Selling and customer-service costs depend on die numberof customers that Scott can support, not the actual number of customers it serves. Scott has 110 customers in 2015 and 100 customers in 2011. 1. Calculate operating income of Scott Companyfor 2016 and 2011. 2. Calculate the growth, price-recovery, and productivity components that explain the change in operat- ing income from 2016 to 201?. 3. Comment on your answer in requirementZ. What do these components indicate