Information about Bodacious Corporation is as follows: $\begin{array}{lcr}&2018&2019\
\text { Output (units) } & 120,000 & 126,000 \
\text { Selling price per unit } & \$ 25 & \$ 25\\
\text { Input quantities: }\
\text { Materials (pounds) }&6,000&6,000\
\text { Labor (hours) }&4,800&4,825\\
\text { Input prices: }\
\text { Materials (per pound) }&\$5.00&\$5.50\
\text { Labor (per hour) }&\$7.00&\$7.50
\end{array}$ By how much did profits change as a result of changes in productivity related to materials?
A)$1,650.00 increase
B)$1,650.00 decrease
C)$937.50 decrease
D)$937.50 increase

Question

Quizplus · Accepted Answer

The change in productivity related to materials is the change in output per pound of materials. In 2018, the output per pound of materials was 120,000 units / 6,000 pounds = 20 units per pound. In 2019, the output per pound of materials was 126,000 units / 6,000 pounds = 21 units per pound. This represents a 5% increase in productivity.The change in profits as a result of the change in productivity related to materials is the change in output multiplied by the change in selling price per unit. In this case, the change in output is 126,000 units - 120,000 units = 6,000 units. The change in selling price per unit is $0.00. Therefore, the change in profits is 6,000 units * $0.00 = $0.00.

Information About Bodacious Corporation Is as Follows By How Much Did Profits Change as a Result of (units)