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Guble Company manufactures wallets from fabric. In 2 0 2 1 , Guble made 2 , 3 5 0 , 0 0 0 wallets using

Guble Company manufactures wallets from fabric. In 2021, Guble made 2,350,000 wallets using 1,975,000 metres of fabric. In 2022, Guble plans to make 2,209,000 wallets and wants to make fabric use more efficient. At the same time, Guble wants to reduce capacity; capacity in 2021 was 2,800,000 wallets at a total cost of $8,400,000. Guble wants to reduce capacity to 2,650,000 wallets, at a total cost of $8,215,000 in 2022.
Suppose that in 2022 Guble makes 2,209,000 wallets, uses 1,658,000 metres of fabric, and reduces capacity to 2,650,000 units and costs to $8,215,000. And the fabric costs $4.1 per metre in 2022 and $4.2 per metre in 2021.
Required: (do not round the interim calculation but round your answers to 4 decimal places)
1. Compute Guble Company's total factor productivitiy (TFP) for 2022.
2. Compare TFP for 2022 with a benchmark TFP for 2021 inputs based on 2022 output.
Answer:
1.
Answer
units of output per dollar of input = Answer
wallets
________________________
$Answer
2.
$Answer
= $ Answer
/ Answer
The inputs that would have been used in 2021 to produce year 2022s 2,209,000 units of output assuming the year 2021 relationship between inputs and outputs are:
Direct materials =1,975,000 metres x Answer
/ Answer
=1,856,500 metres
Manufacturing capacity = Answer
units of capacity, because manufacturing capacity is
fixed, and adequate capacity existed in 2021 to produce year 2022
output.
Answer
units of output per dollar of input = Answer
wallets
_______________________
$Answer
Using year 2022 prices, total factor productivity increased Answer
% from 2021 to 2022.

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