Basics of Productivity MeasurementHolbrook Company gathered the following data for the past two years:Base Year Current Year1,140,000920,000$15OutputOutput pricesInput quantities:Materials (lbs.)Labor (hrs.)Input prices:MaterialsLaborRequired:184,00092,000Materials productivity ratioLabor productivity ratioFeedback$5$8Holbrook CompanyProductivity ProfileBase Year1. Prepare a productivity profile for each year. If required, round your answers to two decimal places.5101,140,000570,000$151$6$8Current Year2.00 2. Prepare partial income statements for each year.SalesMaterialsLaborHolbrook CompanyPartial Income StatementsBase YearGross profitFeedbackCheck My Work13,800,000920,000736,00012,144,000Current Year1,575,000 X6,300,000 X4,200,000 X5,250,000 XCalculate the total change in income. If the change is negative, enter answer using a minus sign.-6,894,000 X3. Calculate the change in profits attributable to productivity changes. If the change is negative, enter answer using a minus sign. If required, round yourintermediate calculations to the nearest dollar.4. Calculate the price-recovery component. If required, round your intermediate calculations to the nearest dollar.

Productivity is the measure of efficiency and output in various fields, It is the ratio of output to input, indicating the effectiveness of the resources. Improving productivity often involves optimizing processes, eliminating inefficiencies, and enhancing the overall effectiveness of resources. Part 1) Prepare a productivity profile for each year:Base year:Material productivity ratio = = = 5Labor productivity ratio = = = 10Current year: Material productivity ratio = Labor productivity ratio = = 2Part 2) Prepare partial income statements for each year:Base year:Sales = 920,000*15 = 13,800,000Material = 184,000*5 = 920,000Labour = 92,000 * 8 = 736,000Gross profit = 13,800,000 - (920,000 + 736,000) = 1,2144,000Current year: Sales = 1140,000*15 = 1710,0000Material = 1140,000*6 = 6840,000Labour = 570000*8 = 4560,000Gross profit = 1710,0000 - ( 6840,000 + 4560,000) = 5,700,000Part 3) The total change in income:The total change in income = ( 5,700,000 - 1,2144,000 ) = -6444000 decreasePart 4) The change in profits attributable to productivity changes. PQPQ*PAQAQ*P(PQ*P)-(AQ*P)Material (1140,000/5) = 228,000228000*6 = 1,368,0001140,000(1140,000*6) =6,840,000-5472000Labor (1140000/10) =114,000114,000*8 = 912,000570,000(570,000*8)= 4,560,000-3648000-9,120,000Part 5) Price recovery component:Price recovery component = Total change in income - Change in profits attributable to productivity= (-6,444,000 - (-9,120,000)) = $2,676,000Part 1) Prepare a productivity profile for each year: Productivity profile Base yearCurrent year Material productivity ratio51Labor productivity ratio102Part 2) Prepare partial income statements for each year: Partial income statement Base yearCurrent year Sales1,3800,0001,7100,000Material 9200006840000Labor7360004560000Gross profit 121440005700000Part 3) The total change in income = (-6444,000) decreasePart 4) The change in profits attributable to productivity changes = (-9,120,000)Part 5) Price recovery component = $2,676,000