A productivity index of 110% means that a company's labor costs would have been 10% higher if it had not made production improvements. Assume that Baldwin had a productivity index of 112% and that Chester had a productivity index of 103%. Now refer to the Income Statements in the Annual Report for Baldwin and Chester. Using the labor costs shown in the Income Statements, how much more did Baldwin save in direct labor costs compared to Chester by having a higher productivity index? Select: 1 Save Answer $3,188 $3,507 $2,869 $3,347 (Product Name:) Sales Na Cone $34,528 2019 Income Statement Cat Na Na $21,680 $21,154 SO $0 Creak $41,382 Na $0 2019 Common Total Size $118,744 100.0% $0 Variable Costs: Direct Labor Direct Material Inventory Carry Total Variable $4,864 $12,077 $26 $16.967 $10,585 $18,054 $25 $28,664 $4,405 $9,173 $377 $13.954 $4,323 $8,431 $341 $13,094 SO $0 $0 $0 $0 $0 $0 $0 SO $0 $0 $0 SO SO $0 $0 $24,177 $47,734 $769 $72,680 20.4% 40.2% 0.6% 61.2% Contribution Margin $17.561 $12,717 $7,726 $8,080 50 $0 $0 $0 $46,064 38.8% 7.0% 3.2% Period Costs: Depreciation SG&A: R&D Promotions Sales Admin Total Period 32% $2,800 $1.000 $950 $1,000 $521 $6.271 $2,607 $928 $950 $1,000 $625 $6,109 $1,500 $988 $950 $600 $327 $4,365 $1,387 $857 $950 $1,300 $319 $4,813 SO SO SO SO $0 $0 $0 $0 $0 $0 $0 SO $0 $0 $0 $0 $0 $0 $0 $0 $0 SO $0 $0 $8,293 $3,772 $3,800 $3,900 $1,793 $21.558 3.3% 1.5% 18.2% Net Margin $11,290 $6,608 $3,361 $3,247 $0 SO $0 $0 $24,506 20.6% 0.7% 20.0% 2.3% 4.3% 4.7% 0.2% 8.6% Definitions: Sales: Unit sales times ist price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost the cost to carry unsold goods in inventory Other $780 Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D EBIT $23,726 department expenditures for each product. Admin: Administration overhead is estimated at 1.5% Short Term Interest $2,677 of sales Promotions: The promotion budget for each product, Sales: The sales force budget for Long Term Interest $5,072 oach product. Other Charges not included in other categories such as Fees, Write Offs, and Taxes $5,592 TOM. The fees include money paid to investment bankers and brokerage firms to issue new Profit Sharing $208 stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you Net Profit $10,177 might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on Variable Margins the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes Short Term 2008 Chester Interest Interest expense based on last year's current debt, including short term debt, long term 50.0% notes that have become due, and emergency loans. Long Term Interest Interest paid on outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared 40.0% with employees under the labor contract. Net Profit EBIT minus interest, taxes, and profit 30.0% sharing 20.0% 10.0% 0.0%
