Lau Company gathered the following data for the past two years:

Base Year Current Year Output 150,000 180,000 Output prices $20 $20 Input quantities:

Materials (1b) 200,000 180,000 Labor (hr) 50,000 90,000 Input prices:

Materials $5 $6 Labor $8 $8 Required:

1. Calculate the partial operational productivity measures for each year.

2. Prepare income statements for each year. Calculate the total change in income.
3. Calculate the change in profits attributable to productivity changes.
4. Calculate the price-recovery component. Explain its meaning.