Interperiod Measurement of Productivity, Profit-Linked Measurement 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: Output Power (quantity used) Materials (quantity used) 20x1 20x2 184,600 217,400 23,075 10,600 36,920 47,200 Suppose the following input prices are provided for each year: Unit price (power) Unit price (materials) 20x1 20x2 $2 20 $ 3 19 6 8 Unit selling price 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. Feedback ▼ Check My Work 1. PQ X P: What were the productivity profiles in the first year? Use them to compute how much material and labor would have been used in the second year given production in the second year. AQ X P: What was actually spent in the second year? (PQ - AQ) X P: What is the difference? 2. Compute the profitability for both years using actual costs. Compare the change in profitability to the result of Requirement 1.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Interperiod Measurement of Productivity, Profit-Linked Measurement
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:
Output
Power (quantity used)
Materials (quantity used)
20x1
20x2
184,600
217,400
23,075
10,600
36,920
47,200
Suppose the following input prices are provided for each year:
Unit price (power)
Unit price (materials)
20x1
20x2
$2
20
$ 3
19
6
8
Unit selling price
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.
Feedback
▼ Check My Work
1. PQ X P: What were the productivity profiles in the first year? Use them to compute how much material and labor would have been used in the second year given production in the second year. AQ X P: What
was actually spent in the second year? (PQ - AQ) X P: What is the difference?
2. Compute the profitability for both years using actual costs. Compare the change in profitability to the result of Requirement 1.
Transcribed Image Text:Interperiod Measurement of Productivity, Profit-Linked Measurement 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: Output Power (quantity used) Materials (quantity used) 20x1 20x2 184,600 217,400 23,075 10,600 36,920 47,200 Suppose the following input prices are provided for each year: Unit price (power) Unit price (materials) 20x1 20x2 $2 20 $ 3 19 6 8 Unit selling price 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. Feedback ▼ Check My Work 1. PQ X P: What were the productivity profiles in the first year? Use them to compute how much material and labor would have been used in the second year given production in the second year. AQ X P: What was actually spent in the second year? (PQ - AQ) X P: What is the difference? 2. Compute the profitability for both years using actual costs. Compare the change in profitability to the result of Requirement 1.
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