REVISION OF EXHIBIT 13-3 Strategic Analysis of Profitability ACTUAL COMPARISON Revenue and Revenue Cost Effects and Cost Effect of Cost Income of Price- Effects Income Statement Productivity Recovery of Growth Statement Amounts Component Component Component Amounts in 2003 in 2003 in 2003 in 2003 in 2002 (1) (2) (3) (4) (5) Revenues $28,750,000 $2,300,000 U $4,050,000 F $27,000,000 — Costs 23,475,000 $2,012,500 F 607,500 U 630,000 U 24,250,000 Operating income $ 5,275,000 $2,012,500 F $2,907,500 U $3,420,000 F $ 2,750,000 $2,525,000 F Change in operating income (4): Growth component Increase in number of sold 150,000 (100% of growth component $3,420,000 F) Market growth rate in the industry - (10% x 1,000,000 units sold in 2002) 100,000 (66 2/3% x $3,420,000 = $2,280,000 F) Additional units sold 50,000 (33 1/3% x $3,420,000 = $1,140,000 F) (3) (revenue only): Price-recovery component Decrease in price per unit $2.00 x 1,150,000 = $2,300,000 U General decline in the market prices of chips in the industry 1.35 x 1,150,000 = 1,552,500 U Additional decrease in price per unit $0.65 x 1,150,000 = $ 747,500 U Effect of industry-market size factor on operating income: in industry market size $2,280,000 F Growth Effect of product differentiation on operating income: Decrease in operating income due to decline in selling price 1,552,500 U Increase in market prices of inputs (cost effect of 607,500 U Price recovery) $2,160,000 U Effect of cost leadership on operating income: component (2) $2,012,500 F Productivity Additional decrease in price per output unit (Price 747,500 U recovery) attributable to additional units sold 1,140,000 F $2,405,000 F Growth
REVISION OF EXHIBIT 13-3 Strategic Analysis of Profitability ACTUAL COMPARISON Revenue and Revenue Cost Effects and Cost Effect of Cost Income of Price- Effects Income Statement Productivity Recovery of Growth Statement Amounts Component Component Component Amounts in 2003 in 2003 in 2003 in 2003 in 2002 (1) (2) (3) (4) (5) Revenues $28,750,000 — $2,300,000 U $4,050,000 F $27,000,000 Costs 23,475,000 $2,012,500 F 607,500 U 630,000 U 24,250,000 Operating income $ 5,275,000 $2,012,500 F $2,907,500 U $3,420,000 F $ 2,750,000 $2,525,000 F Change in operating income Growth component (4): Increase in number of sold 150,000 (100% of growth component $3,420,000 F) Market growth rate in the industry - (10% x 1,000,000 units sold in 2002) 100,000 (66 2/3% x $3,420,000 = $2,280,000 F) Additional units sold 50,000 (33 1/3% x $3,420,000 = $1,140,000 F) Price-recovery component (3) (revenue only): Decrease in price per unit $2.00 x 1,150,000 = $2,300,000 U General decline in the market prices of chips in the industry 1.35 x 1,150,000 = 1,552,500 U Additional decrease in price per unit $0.65 x 1,150,000 = $ 747,500 U Effect of industry-market size factor on operating income: Growth in industry market size $2,280,000 F Effect of product differentiation on operating income: Decrease in operating income due to decline in selling price 1,552,500 U Increase in market prices of inputs (cost effect of Price recovery) 607,500 U $2,160,000 U Effect of cost leadership on operating income: Productivity component (2) $2,012,500 F Additional decrease in price per output unit (Price recovery) 747,500 U Growth attributable to additional units sold 1,140,000 F $2,405,000 F
Ch13%20Srategy%20Balanced%20Scorecard%20Strategic%20Profitability.docx