1. Profit-Linked Productivity Measurement

   In 20x2, Choctaw Company implements a new process affecting labor and materials.

   Choctaw Company provides the following information so that total productivity can be valued:

   	20x1	20x2
   Number of units produced	540,000	450,000
   Labor hours used	108,000	112,500
   Materials used (lbs.)	2,160,000	1,500,000
   Unit selling price	$20	$22
   Wages per labor hour	$12	$14
   Cost per pound of material	$3.40	$3.50

   Required:

   1. Calculate the cost of inputs in 20x2, assuming no productivity change from 20x1 to 20x2.

   Cost of labor	$
   Cost of materials
   Total PQ cost	$

   2. Calculate the actual cost of inputs for 20x2.

   Cost of labor	$
   Cost of materials
   Total current cost	$

   What is the net value of the productivity changes? $

   How much profit change is attributable to each input's productivity change? If an item is negative, use a minus (-) sign to indicate.

   Labor productivity change	$
   Materials productivity change	$

   3. What if a manager wants to know how much of the total profit change from 20x1 to 20x2 is attributable to price recovery? Calculate the total profit change. $

   Calculate the price-recovery component. $