At the end of 2018, Diatomic Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2019, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows: 2018 2019 Output 45,000 54,000 Output prices $10.00 $10.00 Materials (lbs.) 22,500 22,950 Materials unit price $3.00 $4.00 Labor (hrs.) 18,000 16,875 Labor rate per hour $5.00 $5.00 Power (kwh) 11,250 14,625 Price per kwh $2.00 $3.00 By how much did profit change as a result of profitability changes in labor? a.$23,625 increase
At the end of 2018, Diatomic Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2019, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows: 2018 2019 Output 45,000 54,000 Output prices $10.00 $10.00 Materials (lbs.) 22,500 22,950 Materials unit price $3.00 $4.00 Labor (hrs.) 18,000 16,875 Labor rate per hour $5.00 $5.00 Power (kwh) 11,250 14,625 Price per kwh $2.00 $3.00 By how much did profit change as a result of profitability changes in labor? a.$23,625 increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
At the end of 2018, Diatomic Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2019, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows:
By how much did profit change as a result of profitability changes in labor?
| 2018 | 2019 | |
| Output | 45,000 | 54,000 |
| Output prices | $10.00 | $10.00 |
| Materials (lbs.) | 22,500 | 22,950 |
| Materials unit price | $3.00 | $4.00 |
| Labor (hrs.) | 18,000 | 16,875 |
| Labor rate per hour | $5.00 | $5.00 |
| Power (kwh) | 11,250 | 14,625 |
| Price per kwh | $2.00 | $3.00 |
By how much did profit change as a result of profitability changes in labor?
a.$23,625 increase
b.$23,625 decrease
c.$5,625 increase
d.$45,000 increase
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education