Profit-Linked Productivity Measurement In 20x2, Choctaw Company implements a new process affecting labor and materials. Choctaw Company provides the following information so that total productivity can be valued: 20x1 20x2 Number of units produced 570,000 480,000 Labor hours used 190,000 240,000 Materials used (lbs.) 2,850,000 1,600,000 Unit selling price $21 $23 Wages per labor hour $12 $14 Cost per pound of material $3.80 $3.90 Required: 1. Calculate the cost of inputs in 20x2, assuming no productivity change from 20x1 to 20x2. If required, round your answers to the nearest dollar. Cost of labor $fill in the blank 1 Cost of materials fill in the blank 2 Total PQ cost $fill in the blank 3 2. Calculate the actual cost of inputs for 20x2. If required, round your answers to the nearest dollar. Cost of labor $fill in the blank 4 Cost of materials fill in the blank 5 Total current cost $fill in the blank 6 What is the net value of the productivity changes? If required, round your answers to the nearest dollar. $fill in the blank 7 How much profit change is attributable to each input's productivity change? If an item is negative, use a minus (-) sign to indicate. Labor productivity change $fill in the blank 8 Materials productivity change $fill in the blank 9 3. What if a manager wants to know how much of the total profit change from 20x1 to 20x2 is attributable to price recovery? Calculate the total profit change. $fill in the blank 10 Calculate the price-recovery component. $fill in the blank 11

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Profit-Linked Productivity Measurement

In 20x2, Choctaw Company implements a new process affecting labor and materials.

Choctaw Company provides the following information so that total productivity can be valued:

	20x1	20x2
Number of units produced	570,000	480,000
Labor hours used	190,000	240,000
Materials used (lbs.)	2,850,000	1,600,000
Unit selling price	$21	$23
Wages per labor hour	$12	$14
Cost per pound of material	$3.80	$3.90

Required:

1. Calculate the cost of inputs in 20x2, assuming no productivity change from 20x1 to 20x2. If required, round your answers to the nearest dollar.

Cost of labor	$fill in the blank 1
Cost of materials	fill in the blank 2
Total PQ cost	$fill in the blank 3

2. Calculate the actual cost of inputs for 20x2. If required, round your answers to the nearest dollar.

Cost of labor	$fill in the blank 4
Cost of materials	fill in the blank 5
Total current cost	$fill in the blank 6

What is the net value of the productivity changes? If required, round your answers to the nearest dollar.
$fill in the blank 7

How much profit change is attributable to each input's productivity change? If an item is negative, use a minus (-) sign to indicate.

Labor productivity change	$fill in the blank 8
Materials productivity change	$fill in the blank 9

3. What if a manager wants to know how much of the total profit change from 20x1 to 20x2 is attributable to price recovery? Calculate the total profit change.
$fill in the blank 10

Calculate the price-recovery component.
$fill in the blank 11

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