t size for corrugated boxes did not grow in 20 Hamme reduced the price of its boxes in line with the ma Required mme's gain in operating income in 2016 consistent with the strategy you identified in require e productivity component. In general, does it represent savings in only variable costs, only trategy, balanced scorecard. Grey Corporation makes a special-purpose D4H machine used in ment 1 of Exercise 13-16? 2. Explain th fixed costs, or both variable and fixed costs? 13-18 the textile et 2016. itry. Grey has designed the D4H machine for 2015 to be distinct from its competitors. It has 1s,generallegarded as a superior machine. Grey presents the following data for the years 2015 and 2015 2016 1. Units of D4H produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct material cost per kilogram 5. Manufacturing capacity (units of D4H) 6. Total conversion costs 7. Conversion cost per unit of capacity 8. Selling and customer-service capacity 9. Total selling and customer-service costs 200 $40,000 300,000 $8.00 250 $2,000,000 $8,000 100 customers $1,000,000 $10,000 12 $1,200,000 S100,000 210 $42,000 310,000 S8.50 250 $2,025,000 $8,100 95 customers $940,500 $9,900 12 S1,212,000 $101,000 10. Selling and customer-service capacity cost per customer 11. Design staff 12. Total design costs 13. Design cost per employee Grey produces no defective machines, but it wants to reduce direct materials usage per D4H machine in 2016. Manufacturing conversion costs in each year depend on production capacity defined in terms of D4H units that can be produced, not the actual units of D4H 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 2015 and 80 customers in 2016. 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 balanced scorecard and the reasons for doing so 13-19 Strategic analysis of operating income. Refer to the information in Exercise 13-18 Required 1. Calculate the change in operating income of Grey Corporation in 2015 and 2016. 2. Calculate the growth, price-recovery, and productivity components of changes in operating income between 2015 and 2016 3. Comment on your answer in requirement 2. What do these components indicate? 13-20 Analysis of growth, price-recovery, and productivity c omnonant