Strategic analysis of operating income.
|
2010 |
2011 |
||
|
Number of jobs billed |
60 |
70 |
|
|
Selling price per job |
$50,000 |
$48,000 |
|
|
Software implementation labor hours |
30,000 |
32,000 |
|
|
Cost per software implementation labor hour |
$60 |
$63 |
|
|
Software implementation support capacity (number of jobs it can do) |
90 |
90 |
|
|
Total cost of software implementation support |
$360,000 |
$369,000 |
|
|
Software implementation support capacity cost per job (row 6 ÷ row 5) |
$4,000 |
$4,100 |
1. Calculate the operating income of Westlake Corporation in 2010 and 2011.
2. Calculate the growth, price recovery, and productivity components that explain the change in operating income from 2010 to 2011.
3. Comment on your answer in requirement 2. What do these components indicate?