ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute...
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ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute direct materials for direct manufacturing labor. If workers cut the steel carefully, more parts can be manufactured from a metal sheet, but this requires additional direct manufacturing labor hours. Alternatively, ABC can use fewer labor hours if it is willing to tolerate more waste of direct materials. ABC decided to improve materials productivity this year and the following provides information for the current and prior year:
| Prior Year | Current Year | |
| Output units | 400,000 | 490,000 |
| Direct manufacturing labor hours | 10,000 | 13,500 |
| Wages per hour | $26 | $24 |
| Direct materials used | 160 tons | 180 tons |
| Direct materials cost per ton | $3,375 | $3,250 |
Required: Carry all computations to four digits after the decimal point.
2. Calculate ABC's total productivity in units per dollar in each of the two years.
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