Type of Data	2015	2016
Units of AIIPad produced and sold	800	900
Selling price	$450	$430
Pounds of direct material used	3,200	3,300
Direct material cost per pound	$35	$35
Manufacturing capacity in units	12,000	11,000
Total conversion costs	$1,800,000	$1,650,000
Conversion cost per unit of capacity	$150	$150
Selling and customer service capacity	customers	90 customers
Total selling and customer service costs	$495,000	$495,000
Selling and customer service capacity cost and customer	$500	$550

Assuming Titan had 70 customers in 2015 and 80 customers in 2016,

1. calculate the operating income of Titan for 2015 and 2016;

Particulars 2015 2016

Revenue; 800*450;900*430 360,000 387,000

Direct Material Cost 3200*35;3300*35 112,000 115,500

Conversion Cost 1,800,000 1,650,000

Selling and Customer Service cost 495,000 495,000

Total Cost 2,407,000 2,260,500

Profit/Loss (2,047,000) (1,873,500)

Suppose that during 2016, the overall market for AllPads grew 3%. The decrease in the selling price of the AllPad and increase in market share (that is, sales increases greater than 3%) are the result of Titans strategic actions.

1. Calculate how much of the change in operating income from 2015 to 2016 is due to the industry market size factor, product differentiation, and cost leadership. How does this relate to Titans strategy and its success in implementation? Explain.