Helena Company needs to increase its profits and so has embarked on a program to increase its overall productivity. After one year of operation, Kent Olson, manager of the Columbus plant, reported the following results for the base period and its most recent year of operations: 20x120x2Output184,500 217,000 Power (quantity used)23,063 11,000 Materials (quantity used)46,125 47,100 Suppose the following input prices are provided for each year: 20x120x2Unit price (power)$ 6 $ 7 Unit price (materials)20 19 Unit selling price8 10 Required:1. Compute the profit-linked productivity measure. By how much did profits increase due to productivity? If required, round your intermediate calculations and final answers to the nearest dollar amount.2. Calculate the price-recovery component for 20x2. If required, round your intermediate calculations and final answers to the nearest dollar amount.

Profit-linked productivity measure: It measures the change in profits due to increase in the…

Answered: Helena Company needs to increase its…

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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Helena Company needs to increase its profits and so has embarked on a program to increase its overall productivity. After one year of operation, Kent Olson, manager of the Columbus plant, reported the following results for the base period and its most recent year of operations:

	20x1	20x2
Output	184,500	217,000
Power (quantity used)	23,063	11,000
Materials (quantity used)	46,125	47,100

Suppose the following input prices are provided for each year:

	20x1	20x2
Unit price (power)	$ 6	$ 7
Unit price (materials)	20	19
Unit selling price	8	10

Required:

1. Compute the profit-linked productivity measure. By how much did profits increase due to productivity? If required, round your intermediate calculations and final answers to the nearest dollar amount.

2. Calculate the price-recovery component for 20x2. If required, round your intermediate calculations and final answers to the nearest dollar amount.

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