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Profit-Linked Productivity Measurement In 2015, Choctaw Company implements a new process affecting labor and materials. Choctaw...
Profit-Linked Productivity Measurement In 2015, Choctaw Company implements a new process affecting labor and materials. Choctaw Company provides the following information so that total productivity can be valued: 2014 2015 Number of units produced 510,000 420,000 Labor hours used 102,000 105,000 Materials used (lbs.) 1,700,000 1,050,000 Unit selling price 24 26 Wages per labor hour 14 16 Cost per pound of material 3.90 4.00
Required: 1. Calculate the cost of inputs in 2015, assuming no productivity change from 2014 to 2015. 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 2015. 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 2014 to 2015 is attributable to price recovery?
Calculate the total profit change. $
Calculate the price-recovery component. $
Solutions
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| 2014 | 2015 | ||
| No of units produced | 510000 | 420000 | |
| Labor Hours Used | 102000 | 105000 | |
| Material Used | 1700000 | 1050000 | |
| Unit Selling Price | 24 | 26 | |
| Wages Per hour | 14 | 16 | |
| Cost per pound of Material | 3.9 | 4 | |
| 1 | Since no productivity changed assumed for 2015, Material and Hours used in 2014 will be used in 2015 at 2015 rate | ||
| $ | |||
| Cost of Labor | 102000*16 | 1632000 | |
| Cost of Material | 1700000*4 | 6800000 | |
| Total | 8432000 | ||
| 2 | Actual Cost | ||
| $ | |||
| Cost of Labor | 105000*16 | 1680000 | |
| Cost of Material | 1050000*4 | 4200000 | |
| Total | 5880000 | ||
| 2b | |||
| Net Value of Productiviy Change | 8432000-5880000 | 2552000 | |
| Labor Productivity Change | 1632000-1680000 | -48000 | |
| Material Productivity Change | 6800000-4200000 | 2600000 | |
| 3 | Profit Change | ||
| 2014 | 2015 | ||
| No of units produced | 510000 | 420000 | |
| Unit Selling Price | 24 | 26 | |
| Sale Revenue (Unit*Unit Selling Price | 12240000 | 10920000 | |
| Less: Labor Cost | 1428000 | 1680000 | |
| Less: Material Cost | 6630000 | 4200000 | |
| Profit | 4182000 | 5040000 | |
| Change in Profit (4182000-5040000) | -858000 | ||
| Price Recovery Component | |||
| Revenue Effect | (Selling Price 2015-Selling Price 2014)*Sale Unit in 2015 | ||
| (26-24)*420000 | |||
| 840000 F | |||
| Cost Effect of Labor | (Price in 2015-Price in 2014)*Unit of Input needed to produce 2015 Output in 2014 | ||
| (16-14)*(102000/510000)*420000 | |||
| 2*84000 | |||
| 168000 U | |||
| Cost Effect of Material | (Price in 2015-Price in 2014)*Unit of Input needed to produce 2015 Output in 2014 | ||
| (4-3.9)*(1700000/510000)*420000 | |||
| 0.1*1400000 | |||
| 140000 U | |||
| Revenue Effect | 840000 | F | |
| Cost Effect of Labor | 168000 | U | |
| Cost Effect of Material | 140000 | U | |
| Price Recovery Component | 532000 | F |
ekkarill92 answered 1 year agoRelated Solutions
Profit-Linked Productivity Measurement In 2015, Choctaw Company implements a new process affecting labor and materials. Choctaw...
Profit-Linked Productivity Measurement
In 2015, Choctaw Company implements a new process affecting
labor and materials.
Choctaw Company provides the following information so that total
productivity can be valued:
2014
2015
Number of units produced
570,000
480,000
Labor hours used
114,000
120,000
Materials used (lbs.)
2,850,000
1,600,000
Unit selling price
20
22
Wages per labor hour
12
14
Cost per pound of material
3.70
3.80
Required:
1. Calculate the cost of inputs in 2015,
assuming no productivity change from 2014 to...
Profit-Linked Productivity Measurement In 2015, Choctaw Company implements a new process affecting labor and materials. Choctaw...
Profit-Linked Productivity Measurement
In 2015, Choctaw Company implements a new process affecting
labor and materials.
Choctaw Company provides the following information so that total
productivity can be valued:
2014
2015
Number of units produced
570,000
480,000
Labor hours used
114,000
120,000
Materials used (lbs.)
1,900,000
1,200,000
Unit selling price
25
27
Wages per labor hour
16
18
Cost per pound of material
3.70
3.80
Required:
1. Calculate the cost of inputs in 2015,
assuming no productivity change from 2014 to...
Profit-Linked Productivity Measurement In 2015, Choctaw Company implements a new process affecting labor and materials. Choctaw...
Profit-Linked Productivity Measurement
In 2015, Choctaw Company implements a new process affecting
labor and materials. Choctaw Company provides the following
information so that total productivity can be valued:
2014
2015
Number of units
produced
510,000
420,000
Labor hours
used
170,000
210,000
Materials used
(lbs.)
1,700,000
1,050,000
Unit selling
price
22
24
Wages per labor
hour
12
14
Cost per pound of
material
3.50
3.60
Required:
1. Calculate the cost of inputs in 2015, assuming no
productivity change from 2014...
Profit-Linked Productivity Measurement In 2015, Choctaw Company implements a new process affecting labor and materials. Choctaw...
Profit-Linked Productivity Measurement
In 2015, Choctaw Company implements a new process affecting
labor and materials.
Choctaw Company provides the following information so that total
productivity can be valued:
2014
2015
Number of units produced
570,000
480,000
Labor hours used
114,000
120,000
Materials used (lbs.)
1,900,000
1,200,000
Unit selling price
25
27
Wages per labor hour
16
18
Cost per pound of material
3.70
3.80
Required:
1. Calculate the cost of inputs in 2015,
assuming no productivity change from 2014 to...
Profit-Linked Productivity Measurement In 20x2, Choctaw Company implements a new process affecting labor and materials. Choctaw...
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
$21
$23
Wages per labor hour
$13
$15
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...
Profit-Linked Productivity Measurement In 20x2, Choctaw Company implements a new process affecting labor and materials. Choctaw...
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...
Profit-Linked Productivity Measurement In 20x2, Choctaw Company implements a new process affecting labor and materials. Choctaw...
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
108,000
112,500
Materials used (lbs.)
2,160,000
1,500,000
Unit selling price
$20
$22
Wages per labor hour
$12
$14
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...
Profile Productivity Measurement Objective In 2015, Choctaw Company implements a new process affecting labor and materials....
Profile Productivity Measurement Objective
In 2015, Choctaw Company implements a new process affecting
labor and materials. The following reported data are provided to
evaluate the effect on the company’s productivity:
2014
2015
Number of units produced
630,000
390,000
Labor hours used
210,000
97,500
Materials used (lbs.)
1,145,455
650,000
Required:
1. Calculate the productivity profile for 2014.
If required, round your answers to two decimal places.
Partial Operational Productivity Ratios
2014 Profile
Labor productivity ratio
Material productivity ratio
2. Calculate the...
Profile Productivity Measurement Objective In 20x2, Choctaw Company implements a new process affecting labor and materials....
Profile Productivity Measurement Objective
In 20x2, Choctaw Company implements a new process affecting
labor and materials. The following reported data are provided to
evaluate the effect on the company’s productivity:
20x1
20x2
Number of units produced
600,000
480,000
Labor hours used
200,000
120,000
Materials used (lbs.)
857,143
640,000
Required:
1. Calculate the productivity profile for 20x1.
If required, round your answers to two decimal places.
Partial Operational Productivity Ratios
20x1 Profile
Labor productivity ratio
Material productivity ratio
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Adam, a manager, implements a process for tracking productivity and rewards productive team members with additional...
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offering additional inputs on how productivity can be improved.
Others just played along, with some of them expressing their
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