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 510,000 420,000 Labor hours used 170,000 210,000 Materials used (lbs.) 2,550,000 1,400,000 Unit selling price $20 $22 Wages per labor hour $12 $14 Cost per pound of material $3.60 $3.70

Required:

1. Calculate the cost of inputs in 20x2, assuming no productivity change from 20x1 to 20x2. If required, round your answers to the nearest dollar.

Cost of labor $ Cost of materials Total PQ cost $

2. Calculate the actual cost of inputs for 20x2. If required, round your answers to the nearest dollar.

Cost of labor $ Cost of materials Total current cost $

What is the net value of the productivity changes? If required, round your answers to the nearest dollar. $

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. $