Question
In the fourth quarter of last year, Colditz Company embarked on a major effort to improve productivity. It redesigned products, reengineered manufacturing processes, and offered
In the fourth quarter of last year, Colditz Company embarked on a major effort to improve productivity. It redesigned products, reengineered manufacturing processes, and offered productivity improvement courses. The effort was completed in the last quarter of the current year. The controllers office has gathered the following year-end data to assess the results of this effort:
1. Prepare a summary contribution income statement for each of the 2 years, and calculate the change in operating income.
2. Compute the partial operational productivity ratios for each production factor in each year.
3. Compute the partial financial productivity ratios for each production factor in each year.
UnitsnanufacturedandsoldSellingpriceoftheproductDirectnaterialsused(pounds)CostperpoundofmaterialsDirectlaborhoursHourlywageratePower(kwh)CostofpowerperkwhCurrentYear30,600$5015,600$156,250$303,600$2PriorYear24,600$5014,600$127,600$251,560$2 \begin{tabular}{|l|l|l|} \hline & Current Year & Prior Year \\ \hline Direct materials & & \\ \hline Direct labor & & \\ \hline Power & & \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline \multicolumn{3}{|c|}{ Colditz Company } \\ \hline \multicolumn{2}{|c|}{ Comparative Income Statement } \\ \hline \multicolumn{1}{|c|}{ For the Years Ended } \\ \hline & Current Year & Prior Year \\ \hline & & \\ \hline Variable cost of sales: & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline Total variable costs of sales & & \\ \hline & & \\ \hline & & \\ \hline Change in operating income & & \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline & Current Year & \multicolumn{1}{c|}{ Prior Year } \\ \hline Direct materials & & \\ \hline Direct labor & & \\ \hline Power & & \\ \hline \end{tabular}Step by Step Solution
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