Profit-Linked Productivity Measurement
In 2015, Choctaw Company implements a new process affectinglabor and materials.
Choctaw Company provides the following information so that totalproductivity can be valued:
| 2014 | 2015 |
| Number of units produced | 570,000 | 480,000 |
| Labor hours used | 114,000 | 120,000 |
| Materials used (lbs.) | 1,900,000 | 1,200,000 |
| Unit selling price | 25 | 27 |
| Wages per labor hour | 16 | 18 |
| Cost per pound of material | 3.70 | 3.80 |
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.
| Cost of labor | $ |
| Cost of materials | |
| Total PQ cost | $ |
2. Calculate the actual cost of inputs for2015. If required, round your answers to the nearest dollar.
| Cost of labor | $ |
| Cost of materials | |
| Total current cost | $ |
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'sproductivity change? If an item is negative, use a minus (-) signto indicate.
| Labor productivity change | $ |
| Materials productivity change | $ |
3. What if a managerwants to know how much of the total profit change from 2014 to 2015is attributable to price recovery? Calculate the total profitchange.
$
Calculate the price-recovery component.
$
