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Part 3 Wallet Inc. produces handcrafted wallets. The majority of the manufacturing costs are materials and labor. n declining because the cost of the material
Part 3 Wallet Inc. produces handcrafted wallets. The majority of the manufacturing costs are materials and labor. n declining because the cost of the material and labor have been increasing Based on the current sales price, the company has determined that increasing sales price would impact demand so the company is looking at how to increase productivity. At the beginning of 2020, the company implemented a new cutting and assembly process that would reduce material waste and have a faster production time. At the end of 2020, the CEO wants to know how much profits will have changed from prior because of the new process Below is the information from 2019 and the projected 2020 information 2019 2020 Unit selling price $18 $18 Units produced and sold 36,000 48,000 Materals used 72.000 80,000 Labor used 18,000 20,000 Unit price of materials Unit price of labor $10 $4 $9 Required: Answer the following questions below. Make sure you show your work through cell referencing and provide in-depth comments. Make sure you review Cornerstone 15.3. 1. Compute the productivity profile for materials and labor each year. Comment on the effectiveness of the new production process Productivity Profiles Labor Materials 2019 2020 2. Compute the increase in profits attributable to increased productivity by completing the table below to show the profit-linked productivity measure. Please make sure you are review Input PQ* P AQ AQ'P (PQ-AQ)"P or (PQ P)-AQ*P) Labor Materials Total PO 3. Provide the answers to the following questions: a. What is the value of the productivity changes? b. How much profit change is attributable to labor productivity change? c. How much profit change is attributable to material productivity change? 4. Calculate the total profit change by completing the table below: Change 2020- 2019 2020 2019 Revenues Less Input Costs: Labor Materials Profit 5. Calculate the price-recovery component, and comment on its meaning
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