ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute...
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ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute direct materials for direct manufacturing labor. If workers cut the steel carefully, more parts can be manufactured from a metal sheet, but this requires additional direct manufacturing labor hours. Alternatively, ABC can use fewer labor hours if it is willing to tolerate more waste of direct materials. ABC decided to improve materials productivity this year and the following provides information for the current and prior year:
Prior Year
Current Year
Output units
400,000
490,000
Direct manufacturing labor hours
10,000
13,500
Wages per hour
$26
$24
Direct materials used
160 tons
180 tons
Direct materials cost per ton
$3,375
$3,250
Required: Carry all computations to four digits after the decimal point.
2. Calculate ABC's total productivity in units per dollar in each of the two years.
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