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 can be valued: 20x1 20x2 Number of units produced 570,000 480,000 Labor hours used 190,000 240,000 Materials used (lbs.) 2,850,000 1,600,000 Unit selling price $20 $22 Wages per labor hour $13 $15 Cost per pound of material $3.40 $3.50

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. $

Answer 1

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