An operating profit analysis of Deb Schmidt Ltd revealed the following:
$$\begin{array} { l r }
\text { Operating profit for } 2017 & \$ 500000 \
\text { Add growth component } & 15000 \
\text { Add price-recovery component } & 100000 \
\text { Deduct productivity component } & ( 8000 ) \
\text { Operating profit for } 2018 & \$ 607000
\end{array}$$
Schmidt's operating profit gain is consistent with the:

Question

An operating profit analysis of Deb Schmidt Ltd revealed the following:
$$\begin{array} { l r } 
\text { Operating profit for } 2017 & \$ 500000 \
\text { Add growth component } & 15000 \
\text { Add price-recovery component } & 100000 \
\text { Deduct productivity component } & ( 8000 ) \
\text { Operating profit for } 2018 & \$ 607000
\end{array}$$
Schmidt's operating profit gain is consistent with the:

Quizplus · Accepted Answer

The operating profit gain is consistent with a product differentiation strategy, as indicated by the significant price-recovery component, suggesting the company is able to charge higher prices, likely due to differentiated products.

An Operating Profit Analysis of Deb Schmidt Ltd Revealed the Following