Requirement $1.$ Was Pineway's gain in operating income in $2020$ consistent with a cost leadership strategy?

Pineway's operating income gain is

with a cost leadership strategy. The increase in operating income in $2020$ was driven by the $$91,000$ gain in growth

in $2020.$ Pineway

took advantage of this driving factor to reduce the prices of its motors and to fuel growth. It decreased market share by growing even though the total market size was unchanged.

Requirement $2.$ Explain the productivity component. In general, does it represent savings in only variable costs, only fixed costs, or both variable and fixed costs?

Select the correct definition for the productivity component:

A$.$ It measures the change in operating income attributable solely to the change in the quantity of output sold between the previous year and the current year.

B$.$ It measures the change in operating income attributable solely to changes in the prices of inputs and outputs between the previous year and the current year. It measures the change in

output price compared with changes in input prices.

C$.$ It measures the change in costs attributable to a change in the quantity and mix of inputs used in a year relative to the quantity and mix of inputs that would have been used in a previous

year to produce the current year output. It measures the amount by which operating income increases and costs decrease through the productive use of input quantities.

ent represents savings in

costs, productivity improvements immediately translate into cost savings. In the case of fixed costs, productivity gains would never result, even if management takes

$d$ capacity.