The manager of Blakely Company was reviewing two competing projects for the molding department. The projects represented different methods of preparing the molds for one of the company’s more popular product lines. One project changed the way molds were poured and promised a savings in material usage. The second project redesigned the process so that labor was used more efficiently. The fiscal year was coming to a close, and the manager wanted to make a decision concerning the proposed process changes so that they could be used, if beneficial, during the coming year. The process changes would affect the department’s input usage. For the year just ended, the accounting department provided the following information about the inputs used to produce 100,000 units of output:

Input prices are expected to remain the same for the coming year.
Required:
1. Prepare a productivity profile analysis for the most recently completed year and each project. Does either proposal improve technical efficiency? Explain. Can you make a recommendation about either project using only the physical measures?

2. Calculate the profit-linked productivity measure for each proposal. Which proposal offers the best outcome for the company? How does this relate to the concept of price efficiency? Explain.

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Quantity Unit Prices Materials Labor Energy 200,000 lbs. $ 8 80,000 hrs. 40,000 kwh 10 2 Each project offers a different process design from the one currently being used. Nei- ther project would cost anything to implement. Expected input usage for producing 120,000 units (the expected output for the coming year) for each project is as follows: Project I Project II Materials 200,000 lbs. 220,000 lbs. Labor 80,000 hrs. 60,000 hrs. Energy 40,000 kwh 40,000 kwh