Question
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
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: Number of units produced Labor hours used Materials used (lbs.) Unit selling price Wages per labor hour 20x1 20x2 570,000 480,000 190,000 240,000 2,850,000 1,600,000 $20 $22 $15 $17 $3.60 $3.70 Cost per pound of material Question: 1- 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. 2- Calculate the price-recovery component.
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