Partial-productivity measurement. Gable Company manufactures wallets from fabric. In 2016, Gable made 2,160,000 wallets using 1,600,000 yards of fabric. In 2016, Gable has capacity to make 2,448,000 wallets and incurs a cost of $8,568,000 for this capacity. In 2017, Gable plans to make 2,203,200 wallets, make fabric use more efficient, and reduce capacity. Suppose that in 2017 Gable makes 2,203,200 wallets, uses 1,440,000 yards of fabric, and reduces capacity to 2,295,000 wallets at a cost of $7,803,000. Assume the fabric costs $4.00 per yard in 2017 and $4.10 per yard in 2016. Q. Compute Gable Company’s total factor productivity (TFP) for 2017.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Partial-productivity measurement. Gable Company manufactures wallets from fabric. In 2016, Gable made 2,160,000 wallets using 1,600,000 yards of fabric. In 2016, Gable has capacity to make 2,448,000 wallets and incurs a cost of $8,568,000 for this capacity. In 2017, Gable plans to make 2,203,200 wallets, make fabric use more efficient, and reduce capacity. Suppose that in 2017 Gable makes 2,203,200 wallets, uses 1,440,000 yards of fabric, and reduces capacity to 2,295,000 wallets at a cost of $7,803,000.
Assume the fabric costs $4.00 per yard in 2017 and $4.10 per yard in 2016.
Q. Compute Gable Company’s total factor productivity (TFP) for 2017.
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