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 productivity
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 | $23 | $25 |
Wages per labor hour | $15 | $17 |
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.
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