As the cost accounting manager at McKinley Industries (MI), you are responsible
ID: 2474805 • Letter: A
Question
As the cost accounting manager at McKinley Industries (MI), you are responsible for compiling and reporting various performance measures to the senior managers. MI instituted many efficiency improvement programs recently and the CFO has asked you to measure and report total factor productivity based on three inputs (material, labor, and overhead). From the accounting records, you also gather the following information for the two years:
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.)
As the cost accounting manager at McKinley Industries (MI), you are responsible for compiling and reporting various performance measures to the senior managers. MI instituted many efficiency improvement programs recently and the CFO has asked you to measure and report total factor productivity based on three inputs (material, labor, and overhead). From the accounting records, you also gather the following information for the two years:
Explanation / Answer
Answer
Working
Total factor productivity = Total Output Value / Total Value of Input Cost
Year 1
Total Output Value = Selling price of output (per gallon) * Output (gallons)
Total Output Value = 346*20600
Total Output Value = 7127600
Total Value of Input Cost :
Material Value = Cost of inputs (per gallon) * Gallons input
Material Value = 77*41900
Material Value = 3,226,300
Labor Value = Wage rate (per hour) * Labor hours
Labor Value = 7*38000
Labor Value = 266,000
Overhead Value = 2970000 (Given)
Total Value of Input Cost = Material Value + Labor Value + Overhead Value
Total Value of Input Cost = 3,226,300 + 266,000 + 2970000
Total Value of Input Cost = 6,462,300
Total factor productivity = 7127600/6462300
Total factor productivity = 1.103
Year 2
Total Output Value = Selling price of output (per gallon) * Output (gallons)
Total Output Value = 365*26100
Total Output Value = 9,526,500
Total Value of Input Cost :
Material Value = Cost of inputs (per gallon) * Gallons input
Material Value = 74*45700
Material Value = 3,381,800
Labor Value = Wage rate (per hour) * Labor hours
Labor Value = 23*51000
Labor Value = 1,173,000
Overhead Value = 2760000 (Given)
Total Value of Input Cost = Material Value + Labor Value + Overhead Value
Total Value of Input Cost = 3,381,800 + 1,173,000 + 2760000
Total Value of Input Cost = 7,314,800
Total factor productivity = 9526500/7314800
Total factor productivity = 1.302
Year 2 Year 1 Total Output Value 9,526,500 7,127,600 Material Value 3,381,800 3,226,300 Labor Value 1,173,000 266,000 Overhead Value 2,760,000 2,970,000 Total Value of Input Cost 7,314,800 6,462,300 Total factor productivity 1.302 1.103Related Questions
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