Prevost Chemicals manufactures an industrial solvent at its only processing plant. A liquid chemical and labor are the two primary inputs. All other resources are included in manufacturing overhead. The plant never has any work-in-process or finished goods inventories. Information from the previous four periods of production follows: Period 1 Period 2 Period 3 Period 4 Chemical input (gallons) 125,000 129,280 128,000 120,000 Labor input (hours) 12,500 11,200 15,000 10,100 Solvent sales (gallons) 110,000 113,120 120,000 103,020 Average price of chemical per gallon $ 2.00 $ 2.10 $ 1.95 $ 2.25 Average wage rate per hour 28.00 26.00 31.00 34.00 Average sales price per gallon 10.26 10.00 9.80 10.60 Manufacturing overhead (total) 236,000 245,312 245,400 243,080 Required: a. Compute the partial productivity measures for chemical for the four periods. b. Compute the partial productivity measures for labor for the four periods. c. Compute the total factor productivity for the four periods.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Prevost Chemicals manufactures an industrial solvent at its only processing plant. A liquid chemical and labor are the two primary inputs. All other resources are included in manufacturing
| Period 1 | Period 2 | Period 3 | Period 4 | |
|---|---|---|---|---|
| Chemical input (gallons) | 125,000 | 129,280 | 128,000 | 120,000 |
| Labor input (hours) | 12,500 | 11,200 | 15,000 | 10,100 |
| Solvent sales (gallons) | 110,000 | 113,120 | 120,000 | 103,020 |
| Average price of chemical per gallon | $ 2.00 | $ 2.10 | $ 1.95 | $ 2.25 |
| Average wage rate per hour | 28.00 | 26.00 | 31.00 | 34.00 |
| Average sales price per gallon | 10.26 | 10.00 | 9.80 | 10.60 |
| Manufacturing overhead (total) | 236,000 | 245,312 | 245,400 | 243,080 |
Required:
a. Compute the partial productivity measures for chemical for the four periods.
b. Compute the partial productivity measures for labor for the four periods.
c. Compute the total factor productivity for the four periods.
 |
| **Period 2** | **0.8750**  |
| **Period 3** | **0.9380**  |
| **Period 4** | **0.8590**  |
#### Explanation:
- **Period 1 and Period 2**: Both show productivity values below 0.8800, indicated with a green checkmark, suggesting satisfactory performance.
- **Period 3**: Exhibits a higher productivity value of 0.9380, marked with a red cross, indicating a deviation from the expected range or benchmark.
- **Period 4**: Demonstrates the lowest productivity value at 0.8590, also marked with a red cross.
These measures provide insights into the efficiency and potential areas for improvement in chemical productivity across the specified periods.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F70018f71-7185-4cb2-be6c-94aac78b8d2f%2F8ec4d4bf-2ff8-4733-8941-e7c9deb783dd%2F9gb4j59_processed.png&w=3840&q=75)
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