At the end of 2014, San Leandro Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2015, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows:

a. Compute the partial operational measures for each input for both 2014 and 2015. What can be said about productivity improvement?
b. Prepare an income statement for each year and calculate the total change in profits.
c. Calculate the profit-linked productivity measure for 2015. What can be said about the productivity program?
d. Calculate the price-recovery component. What does this tell you?

Question

At the end of 2014, San Leandro Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2015, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows:
  
a. Compute the partial operational measures for each input for both 2014 and 2015. What can be said about productivity improvement?
b. Prepare an income statement for each year and calculate the total change in profits.
c. Calculate the profit-linked productivity measure for 2015. What can be said about the productivity program?
d. Calculate the price-recovery component. What does this tell you?

Quizplus · Accepted Answer

The Answer of At the end of 2014, San Leandro Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2015, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows:
  
a. Compute the partial operational measures for each input for both 2014 and 2015. What can be said about productivity improvement?
b. Prepare an income statement for each year and calculate the total change in profits.
c. Calculate the profit-linked productivity measure for 2015. What can be said about the productivity program?
d. Calculate the price-recovery component. What does this tell you?

At the End of 2014, San Leandro Company Implemented a New