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	180,000	225,000
Materials used (lbs.)	2,700,000	1,500,000
Unit selling price	$21	$23
Wages per labor hour	$12	$14
Cost per pound of material	$3.70	$3.80

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. $

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: 20x120x2 Number of units produced Labor hours used Materials used (lbs.) 540,000 180,000 2,700,000 $21 $12 $3.70 450,000 225,000 1,500,000 $23 Unit selling price $14 Wages per labor hour Cost per pound of material $3.80 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 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