At the End of 2018, Diatomic Company Implemented a New

question 103

Multiple Choice

At the end of 2018, Diatomic Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2019, 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: $\begin{array}{lrr}&2019&2018\\\text { Output } & 45,000 & 54,000 \\\text { Output prices } & \$ 10 & \$ 10 \\\text { Materials (lbs.) } & 22,500 & 22,950 \\\text { Materials unit price } & \$ 3 & \$4 \\\text { Labor (hrs.) } & 18,000 & 16,875 \\\text { Labor rate per hour } & \$ 5 & \$ 5 \\\text { Power (kwh) } & 11,250 & 14,625 \\\text { Price per kwh } & \$ 2 & \$ 3\end{array}$ By how much did profit change as a result of profitability changes in labor?

• A)$5,625 increase
• B)$45,000 increase
• C)$23,625 increase
• D)$23,625 decrease

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Definitions:

Task Times

The duration required to complete a specific task or activity within a process or project.

Stations Needed

The total number of workstations or production stations required to complete a job or to fulfill a specific part of a manufacturing process efficiently.

Cycle Time

The total time from the beginning to the end of a process, as measured by the customer.