An operating profit analysis of ACT Incorporated revealed the following:
$$\begin{array} { l r }
\text { Operating profit for } 2017 & \$ 500000 \
\text { Add growth component } & 25000 \
\text { Deduct price-recovery component } & ( 15000 ) \
\text { Add productivity component } & 60000 \
\text { Operating profit for } 2018 & \$ 570000
\end{array}$$
ACT's operating profit gain is consistent with the:

Question

An operating profit analysis of ACT Incorporated revealed the following:
$$\begin{array} { l r } 
\text { Operating profit for } 2017 & \$ 500000 \
\text { Add growth component } & 25000 \
\text { Deduct price-recovery component } & ( 15000 ) \
\text { Add productivity component } & 60000 \
\text { Operating profit for } 2018 & \$ 570000
\end{array}$$
ACT's operating profit gain is consistent with the:

Quizplus · Accepted Answer

The operating profit gain of ACT Incorporated is consistent with the cost leadership strategy, which aims to achieve a competitive advantage by producing goods or services at the lowest cost possible. This indicates that ACT has been successful in reducing its operating expenses and increasing efficiency, resulting in a higher profit margin. The other options, such as product differentiation, re-engineering, and downsizing, are not directly related to increasing operating profits through cost reduction.

An Operating Profit Analysis of ACT Incorporated Revealed the Following