Productivity Measurement, Technical and Price Efficiency In 20x1, Fleming Chemicals used the following input combination to produce 60,000 gallons of an industrial solvent: Materials 38,100 lbs. Labor 76,200 hrs. In 20x2, Fleming again planned to produce 60,000 gallons of solvent and was considering two different changes in process, both of which would be able to produce the desired output. The following input combinations are associated with each process change: Change I Change II Materials 44,450 lbs. 31,750 lbs. Labor 50,800 hrs. 63,500 hrs. The following combination is optimal for an output of 60,000 units. However, this optimal input combination is unknown to Fleming. Materials 25,400 lbs. Labor 50,800 hrs. The cost of materials is $48 per pound, and the cost of labor is $12 per hour. These input prices hold for 20x1 and 20x2. Required: 1. Compute the productivity profiles for each of the items listed below: a. The actual inputs used in 20x1. If required, round your answers to two decimal places. 20x1 Materials Labor b. The inputs for each proposed 20x2 process change. If required, round your answers to two decimal places. Materials Labor Change I Change II c. The optimal input combination. If required, round your answers to two decimal places. Optimal Materials Labor 2. Compute the cost of 20x1’s productive inefficiency relative to the optimal input combination. Repeat for 20x2 proposed input changes. Cost of Productive Inefficiency 20x1 $ 20x2 Change I $ 20x2 Change II $ Compute the amount of the productivity improvement from 20x1 to 20x2 for each process change. If an amount is zero, enter "0". Potential Improvement for 20x2 Change I $ Change II $ Feedback 1. How much of each resource was used per unit produced in 20x1, and how much of each would be used under the proposed changes for 20x2? How much of each resource would be used under the optimal combination? 2. For each scenario, compute the cost of materials and labor. Compare the outcome to that of the optimal combination and to the original scenario. Check My Work5 more Check My Work uses rema
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.
Productivity Measurement, Technical and Price Efficiency
In 20x1, Fleming Chemicals used the following input combination to produce 60,000 gallons of an industrial solvent:
| Materials | 38,100 lbs. |
| Labor | 76,200 hrs. |
In 20x2, Fleming again planned to produce 60,000 gallons of solvent and was considering two different changes in process, both of which would be able to produce the desired output. The following input combinations are associated with each process change:
| Change I | Change II | |
| Materials | 44,450 lbs. | 31,750 lbs. |
| Labor | 50,800 hrs. | 63,500 hrs. |
The following combination is optimal for an output of 60,000 units. However, this optimal input combination is unknown to Fleming.
| Materials | 25,400 lbs. |
| Labor | 50,800 hrs. |
The cost of materials is $48 per pound, and the cost of labor is $12 per hour. These input prices hold for 20x1 and 20x2.
Required:
1. Compute the productivity profiles for each of the items listed below:
a. The actual inputs used in 20x1. If required, round your answers to two decimal places.
| 20x1 | |
| Materials | |
| Labor |
b. The inputs for each proposed 20x2 process change. If required, round your answers to two decimal places.
| Materials | Labor | |
| Change I | ||
| Change II |
c. The optimal input combination. If required, round your answers to two decimal places.
| Optimal | |
| Materials | |
| Labor |
2. Compute the cost of 20x1’s productive inefficiency relative to the optimal input combination. Repeat for 20x2 proposed input changes.
| Cost of Productive Inefficiency | |
| 20x1 | $ |
| 20x2 Change I | $ |
| 20x2 Change II | $ |
Compute the amount of the productivity improvement from 20x1 to 20x2 for each process change. If an amount is zero, enter "0".
| Potential Improvement for 20x2 | |
| Change I | $ |
| Change II | $ |
1. How much of each resource was used per unit produced in 20x1, and how much of each would be used under the proposed changes for 20x2? How much of each resource would be used under the optimal combination?
2. For each scenario, compute the cost of materials and labor. Compare the outcome to that of the optimal combination and to the original scenario.
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