In: Accounting
Davis Company produced 159,000 sport jackets during 2015 and 530,000 direct manufacturing labor hours were used at $3 per hour. The conversion costs were $1.20 per jackets produced. What is the total factor productivity for Davis Company?
a. 2.500 units of output per dollar
b. 0.300 units of outpur per dollar
c. 0.298 units of output per dollar
d. 0.089 units of output per dollar
d. 0.089 units of output per dollar
Working:
Cost of direct labor hours | = | Direct Labor hours | x | Labor rate | ||||||
= | 5,30,000 | x | $ 3.00 | |||||||
= | $ 15,90,000 | |||||||||
Conversion Cost | = | Units produced | x | Conversion cost per unit | ||||||
= | 1,59,000 | x | $ 1.20 | |||||||
= | $ 1,90,800 | |||||||||
Total cost of Manufacturing | = | $ 15,90,000 | + | $ 1,90,800 | ||||||
= | $ 17,80,800 | |||||||||
Total factor productivity for Davis Company | = | Total units manufactured/Total manufcaturing cost | ||||||||
= | 1,59,000 | / | $ 17,80,800 | |||||||
= | $ 0.089 | units of output per dollar | ||||||||