At the End of 20X1,Wilson Company Implemented a New Labour

question 54

Essay

At the end of 20X1,Wilson Company implemented a new labour process and redesigned its product with the expectation that input usage efficiency would increase.Now,at the end of 20X2,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:
$\begin{array}{lrr}&20X1&20X1\\\text { Output } & 20,000 & 24,000 \\\text { Output prices } & \$ 20 & \$ 20 \\\text { Materials (kg) } & 16,000 & 16,800 \\\text { Materials unit price } & \$ 6 & \$ 8 \\\text { Labour (hrs.) } & 10,000 & 9,600 \\\text { Labour rate per hour } & \$ 10 & \$ 10 \\\text { Power (kwh) } & 4,000 & 6,000 \\\text { Price per kwh } & \$ 2 & \$ 3\end{array}$
a.Compute the partial operational measures for each input for both 20X1 and 20X2.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 20X2.What can be said about the productivity program?
d.Calculate the price-recovery component.What does this tell you?

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Definitions:

Safety Stock

An additional quantity of an item held in inventory in order to reduce the risk that the item will be out of stock.

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, indicating how spread out the data points are.

Lead Time

The total amount of time it takes from the initiation of a process or order until it's completed, influencing inventory levels and customer satisfaction.