Interperiod Measurement of Productivity, Profit-Linked Measurement

Helena Company needs to increase its profits and so has embarked on a program to increase its overall productivity. After one year of operation, Kent Olson, manager of the Columbus plant, reported the following results for the base period and its most recent year of operations:

	2014	2015
Output	184,500	217,000
Power (quantity used)	23,063	11,000
Materials (quantity used)	46,125	47,800

Suppose the following input prices are provided for each year:

	2014	2015
Unit price (power)	$ 4	$ 5
Unit price (materials)	18	17
Unit selling price	8	10

Required:

1. Compute the profit-linked productivity measure. By how much did profits increase due to productivity? $

2. Calculate the price-recovery component for 2015.

$