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Fred McReynolds is the accountant for Y Ltd and conducted the following analysis of the...

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Accounting

Fred McReynolds is the accountant for Y Ltd and conducted the following analysis of the change in operating income between 2018 and 2019:

Operating income for 2018 $4,450,000

Add growth component 70,000

Add price-recovery component 392,000

Deduct productivity component (55,000)

Operating income for 2019 $4,857,000

Required:

Explain whether Y Ltds operating income increase is consistent with the product differentiation or cost leadership strategy?

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