Question
As the cost accounting manager at McKinley Industries (MI), you are responsible for compiling and reporting various performance measures to the senior managers. MI instituted
As the cost accounting manager at McKinley Industries (MI), you are responsible for compiling and reporting various performance measures to the senior managers. MI instituted many efficiency improvement programs recently and the CFO has asked you to measure and report total factor productivity based on three inputs (material, labor, and overhead). From the accounting records, you also gather the following information for the two years:
| Year 2 | Year 1 | |
| Gallons input | 46,000 | 41,300 |
| Labor hours | 50,200 | 39,800 |
| Output (gallons) | 26,800 | 20,700 |
| Year 2 | Year 1 | ||||
| Cost of inputs (per gallon) | $ | 68 | $ | 79 | |
| Wage rate (per hour) | $ | 6 | $ | 9 | |
| Total manufacturing overhead | $ | 2,870,000 | $ | 3,090,000 | |
| Selling price of output (per gallon) | $ | 379 | $ | 357 | |
| Required: | |
| Compute the total factor productivity measures for year 1 and year 2 based on the three inputs (material, labor, and overhead). (Round your answers to 3 decimal places.) | |
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