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Profit-Linked Productivity Measurement In 2015, Choctaw Company implements a new process affecting labor and materials. Choctaw Company provides...

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General Management

Profit-Linked Productivity Measurement

In 2015, Choctaw Company implements a new process affectinglabor and materials.

Choctaw Company provides the following information so that totalproductivity can be valued:

20142015
Number of units produced570,000480,000
Labor hours used114,000120,000
Materials used (lbs.)1,900,0001,200,000
Unit selling price2527
Wages per labor hour1618
Cost per pound of material3.703.80

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 for2015. 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'sproductivity change? If an item is negative, use a minus (-) signto indicate.

Labor productivity change$
Materials productivity change$

3. What if a managerwants to know how much of the total profit change from 2014 to 2015is attributable to price recovery? Calculate the total profitchange.
$

Calculate the price-recovery component.
$

Answer & Explanation Solved by verified expert
4.3 Ratings (801 Votes)
Labour Productivity Number of units producedNo of labour hours Material Productivity Volume of material used in lbsNumber of units produces So for 2014 2015 below table shows the productivity numbers 2014 2015 Labour Productivity unitshr 50 40 Material Productivity Lbsunit 33 25 First Part Cost in 2015 assuming productivity levels of 2014 For    See Answer
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