ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute direct materials for direct manufacturing labor. If workers cut the steel carefully, more parts can be manufactured from a metal sheet, but this requires additional direct manufacturing labor-hours. Alternatively, ABC can use fewer direct manufacturing labor-hours if it is willing to tolerate more waste of direct materials. ABC decides to improve materials productivity and provides this information for the current and prior years:

Required
Carry all computations to four digits after the decimal point.
1. Compute the partial financial productivity for both manufacturing factors for each of the two years.
2. Calculate ABC's total productivity in units per dollar in each of the two years.
3. Evaluate management's decision to substitute one production factor for another.

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Output units Direct manufacturing labor-hours Wages per hour Direct materials used (tons) Direct materials cost per ton Prior Year Current Year 490,000 13,500 $24 180 $3,250 400,000 10,000 $26 160 $3,375