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Marshall Corporation makes a$$ special$-$purpose D$4$H machine used in the textile industry. Marshall has designed the D$4$H machine for $2021$ to be distinct from its competitors. It has been generally regarded as a superior machine. Marshall presents the following data for the years $2021$ and $2022.$

LOADING...$($Click the icon to view the$$ data.$)$ LOADING...$($Click the icon to view the additional$$ information.$)$

Required

$1.$ Calculate the change in operating income of Marshall Corporation in $2021$ and $2022.$

$2.$ Calculate the$$ growth, price$-$recovery, and productivity components of changes in operating income between $2021$ and $2022.$

$3.$ Comment on your answer in requirement $2.$ What do these components$$ indicate?

Question content area bottom

Part $1$

Requirement $1.$ Calculate the change in operating income of Marshall Corporation in $2021$ and $2022.($Use a minus sign or parentheses for negative$$ amounts.$)$

$2021$

$2022$

Revenues

$$7,800,000$

$$8,610,000$

Costs

:

Direct material costs

$2,635,000$

$2,800,000$

Manufacturing conversion costs

$2,250,000$

$2,280,000$

Selling and customer service costs

$1,000,000$

$940,500$

Design costs

$1,144,000$

$1,149,500$

Total costs

$7,029,000$

$7,170,000$

Operating income

$$771,000$

$$1,440,000$

Part $2$

Requirement $2.$ Calculate the$$ growth, price$-$recovery, and productivity components of changes in operating income between $2021$ and $2022.$

To assist$$ you, use the popup to identify the various components of the formulas.

LOADING... $($Click the icon to view the components you will use in your$$ formulas.$)$

Begin by determining the formula to calculate the revenue effect of growth.$$ Then, enter the amounts in the formula.

Part $3$

$($

F

$$

E

$)$ x

K

$=$

Revenue effect of growth

$($

$210$

$$

$200$

$)$ x

$$39,000$

$=$

$$390,000$

Part $4$

$$Next$,$ determine the formula to calculate the cost effect of growth for variable costs.$$ Then, enter the amounts in the formula.$$ Think, based upon the information provided to$$ you, about which cost is variable. $($Hold all decimals in interim calculations. Round each answer to the nearest whole$$ dollar.$)$

Part $5$

$($

M

$$

C

$)$ x

G

$=$

Cost effect of growth for variable costs

$($

$325,500$

$$

$310,000$

$)$ x

$$8\mathrm{.}50$

$=$

$$131,750$

Part $6$

Determine the formula to calculate the cost effect of growth for fixed costs.$$ Then, enter the amounts in the formula. Calculate the cost effect of growth for conversion costs$$ first, then for selling and customer service$$ costs, and finally for design costs. $($If any of the amounts to be entered are$$ zero, please enter$"0".)$

Part $7$Part $8$Part $9$

$($

A

$$

A

$)$ x

I

$=$

Cost effect of growth for fixed costs

$($

$300$

$$

$300$

$)$ x

$$7,500$

$=$

$$0$

conversion costs

$($

$100$

$$

$100$

$)$ x

$$10,000$

$=$

$$0$

selling and customer service costs

$($

$11$

$$

$11$

$)$ x

$$104,000$

$=$

$$0$

design costs

Part $10$

Calculate the net change in operating income due to the growth component. Be sure to label each component as to whether the amount has a favourable effect or an unfavourable effect on operating income. $($Label each component as favourable$($F$)$ or unfavourable$($U$).)$

Revenue effect of growth

$$390,000$

F

Cost effect of growth

$131,750$

U

Change in operating income due to growth

$$258,250$

F

Part $11$

Calculate the$$ price$-$recovery component of the change in operating income. Begin with the revenue effect of$$ price$-$recovery. Select the formula you will$$ need, and then enter the amounts to calculate the revenue effect of$$ price$-$recovery.

Part $12$

$($

L

$$

K

$)$ x

F

$=$

Revenue effect of price$-$recovery

$($

$$41,000$

$$

$$39,000$

$)$ x

$210$

$=$

$$420,000$

Part $13$

$$Next$,$ determine the formula to calculate the cost effect of$$ price$-$recovery for variable costs.$$ Then, enter the amounts in the formula.$$ Think, based upon the information provided to$$ you, about which cost is variable. $($Round your final answer to the nearest whole$$ dollar.$)$

Part $14$

$($

H

$$

G

$)$ x

M

$=$

Cost effect of price$-$recovery for variable costs

$($

$$8\mathrm{.}75$

$$

$$8\mathrm{.}50$

$)$ x

$325,500$

$=$

$$81,375$

Part $15$

Determine the formula to calculate the cost effect of$$ price$-$recovery for fixed costs.$$ Then, enter the amounts in the formula. Calculate the cost effect of$$ price$-$recovery for conversion costs$$ first, then for selling and customer service$$ costs, and finally for design costs.

Part $16$Part $17$Part $18$

$($

J

$$

I

$)$ x

A

$=$

Cost effect of price$-$recovery for fixed costs

$($

$$7,600$

$$

$$7,500$

$)$ x

$300$

$=$

$$30,000$

conversion costs

$($

$$9,900$

$$

$$10,000$

$)$ x

$100$

$=$

$$(10,000)$

selling and customer$-$service costs

$($

$$104,500$

$$

$$104,000$

$)$ x

$11$

$=$

$$5,500$

design costs

Part $19$

Calculate the net change in operating income due to the$$ price$-$recovery component. Be sure to label each component as to whether the amount has a favourable effect or an unfavourable effect on operating income. $($Label each component as favourable$($F$)$ or unfavourable$($U$).)$

Revenue effect of price$-$recovery

$$420,000$

F

Co$3$

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