In 2015, Choctaw Company implements a new process affecting labor and materials.
ID: 3124131 • Letter: I
Question
In 2015, Choctaw Company implements a new process affecting labor and materials.
Choctaw Company provides the following information so that total productivity can be valued:
Required:
1. Calculate the cost of inputs in 2015, assuming no productivity change from 2014 to 2015. If required, round your answers to the nearest dollar.
2. Calculate the actual cost of inputs for 2015. If required, round your answers to the nearest dollar.
What is the net value of the productivity changes? If required, round your answers to the nearest dollar.
$
How much profit change is attributable to each input's productivity change? If an item is negative, use a minus (-) sign to indicate.
3. What if a manager wants to know how much of the total profit change from 2014 to 2015 is attributable to price recovery? Calculate the total profit change.
$
Calculate the price-recovery component.
$
Explanation / Answer
1.
2.
Labour productivity in 2014 = (510,000* 22)/ 102,000 = 110
Labour productivity in 2015 = (420,000*24)/105,000 = 96
Labour productvity change = 96-110 = -14
Material productivity in 2014 = 510,000*22/ 2,550,000= 4.4
material productivity in 2015 = 420,000*24 /1,400,000 = 7.2
Material productivity change = 4.4-7.2 = -2.8
3.
Total profit = Total Revenue - Total cost
Total profit in 2014 = 510,000*22 -(102,000*16+2,550,000*3.40) = 11,220,000- 10,302,000 = 918,000
Total profit in 2015 = 420,000*24 -(105,000*18 + 1,400,000 *3.50) = 10080000-6790000=3290000
Total profit change = 3290000-918000= 2,372,000
cost of labour =105,000*16 = $1,680,000 cost of materials =1,400,000 *3.40 = $4,760,000 Total PQ cost = $1,680,000+$4,760,000 = $ 6,140,000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.