As the cost accounting manager at Cambria Chemicals (CC), you are responsible fo

Question

As the cost accounting manager at Cambria Chemicals (CC), you are responsible for compiling and reporting various performance measures to the senior managers. The company instituted many efficiency improvement programs recently, and the CFO has asked you to measure and report total factor productivity measures based on the three inputs (material, labor, and overhead). Data for the last two years follow:

From the accounting records, you also gather the following information for the two years:

Required:

a. Compute the total factor productivity measures for year 1 and year 2 based on the three inputs (material, labor, and overhead). (Round your answers to 3 decimal places.)

Year 2 Year 1 Gallons input (thousands) 10,000 9,000 Labor-hours (thousands) 8,600 6,200 Gallons of output (thousands) 11,800 9,800

Explanation / Answer

Total factor productivity = Total value of output / Total value of input factor

Table showing Total Factor productivity :- ( In thousands)

Particular Year 2 Year 1 Gallons of Output (A) 11800 9800 Selling price of output (per gallon) (B) 370 375 Total value of output (C = A * B) 4366000 3675000 1. Material Gallons of input used (D) 10000 9000 Cost of input (per Gallon) (E) 83 94 Total value of material used (F = D * E) 830000 846000 Total factor productivity based on material ( C / F) 5.260 4.344 2. Based on Labor Total labor hours used (G) 8600 6200 Wages rate (Per hour) (H) 23 16 Total value of lobor hours used ( I = G * H) 197800 99200 Total factor productivity based on material ( C / I) 22.073 37.046 3. Based on overhead Total manufacturing overhead (J) 1310000 1200000 Total factor poductivity based on overhead ( C / J) 3.333 3.063

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