The following information is from the Solution to the Featured Exercise, pp.172-173: 1. Castleton Company's strategy is cost leadership $64,800 F Change in operating income due to growth component Change in operating income due to price-recovery component 82,320 F 11.840 F Change in operating income due to productivity component Change in operating income from 2010 to 2011 $158,960 F During 2011 the unit sales for Castleton's fertilizer product, Turfgro, increased by 4% (from 10,000 tons in 2010 to 10,400 tons in 2011). A trade association reports the industry market size for this type of fertilizer increased by 3% in 2011. The increase in Turfgro's market share (that is, its unit sales grew by more than the 3% growth in industry market size) and the increase in its selling price are due to customers perceiving this product to be a superior fertilizer. a. Compute the change in operating income from 2010 to 2011 that is due to three factors: industry market size, product differentiation and cost leadership b. How successful has Castleton been in implementing its cost leadership strategy for Turfgro? Explain 132 The following information is from the Solution to the Featured Exercise, pp.172-173: 1. Castleton Company's strategy is cost leadership $64,800 F Change in operating income due to growth component Change in operating income due to price-recovery component 82,320 F 11.840 F Change in operating income due to productivity component Change in operating income from 2010 to 2011 $158,960 F During 2011 the unit sales for Castleton's fertilizer product, Turfgro, increased by 4% (from 10,000 tons in 2010 to 10,400 tons in 2011). A trade association reports the industry market size for this type of fertilizer increased by 3% in 2011. The increase in Turfgro's market share (that is, its unit sales grew by more than the 3% growth in industry market size) and the increase in its selling price are due to customers perceiving this product to be a superior fertilizer. a. Compute the change in operating income from 2010 to 2011 that is due to three factors: industry market size, product differentiation and cost leadership b. How successful has Castleton been in implementing its cost leadership strategy for Turfgro? Explain 132