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CoursHeroTranscribedText: Kitchen Gadgets produces a variety of high-end restaurant grade appliances.like stoves, ovens and fridges. There are a number of other well-recognized companies serving the restaurant industry which has stagnated due to COVID-19. Approximately 5 years ago, the company's research and development group were able to create a product, the FridgeMania, which was superior to any competitive product.- Two years ago, the company priced the FridgeMania at prices that were competitive. As the superiority of the product became apparent, Kitchen Gadgets increased the unit selling price in the most recent fiscal year.-Exhibit.1 presents relevant data for the past two fiscal years." Exhibit One Revenue and Cost Information 2019 & 20209 2019 2020m Volume of FridgeMania produced and sold 9,100m 9,750m Unit selling price $8,000 $8,250mm Direct materials used in production (kilograms) 900,000 920,000um Direct material cost per kilogram $15p $18am Manufacturing capacity (units of FridgeMania)H 10,000 10,000m Total-conversion costs $3,960,000 $4,550,000pm Selling and customer-service capacity 300 customers 275 customers Total selling and.customer-service costsk $3,000,100 $2,747,250 Number of customers 260 250m Engineer staff 30M 20HD Total-engineer costsH $3,250,000H $2,250,000m Required:91 1.- Briefly describe the characteristics of both the value leadership and cost leadership strategies.". Which strategy do you believe that Kitchen Gadgets is following?-Explain. . (3-marks) 2.- Calculate the operating income of Kitchen Gadgets for 2019 and 2020. As well, show the change in income between the two years on a line by line basis. (3 marks)1 3.- Calculate the growth, price-recovery and productivity components that explain the changes-in operating income from 2019 to 2020. (12.marks)9 4.+Suppose that during 2020, the market for the FridgeMania grew by 6%. All-increases in. market share are the result of Kitchen Gadgets' strategic actions. Calculate how much of the change in operating income is due to industry market-size factor, value leadership and cost leadership..Was Kitchen Gadgets successful in implementing its strategy? (4 marks) 9 5.-Management had set a goal for 2020 to reduce material-use per unit by 5%. Were they successful-in achieving this goal?-Provide quantitative support. (3.marks) 1

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