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Interperiod Measurement of Productivity, Profit-Linked Measurement Helena Company needs to increase its profits and so...

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Accounting

Interperiod Measurement of Productivity, Profit-Linked Measurement

Helena Company needs to increase its profits and so has embarked on a program to increase its overall productivity. After one year of operation, Kent Olson, manager of the Columbus plant, reported the following results for the base period and its most recent year of operations:

20x1 20x2
Output 184,800 217,600
Power (quantity used) 18,480 10,700
Materials (quantity used) 36,960 47,300

Suppose the following input prices are provided for each year:

20x1 20x2
Unit price (power) $ 2 $ 3
Unit price (materials) 18 17
Unit selling price 8 10

Required:

1. Compute the profit-linked productivity measure. By how much did profits increase due to productivity? If required, round your intermediate calculations and final answers to the nearest dollar amount. _______

2. Calculate the price-recovery component for 20x2

_______

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