At the End of 20X1, Gilley Company Implemented a New

question 72

Multiple Choice

At the end of 20X1, Gilley 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:
$\begin{array}{lrr}&20 \times 1 & 20 \times 2\\\text { Output } & 30,000 & 36,000 \\\text { Output prices } & \$ 10 & \$ 10 \\\text { Materials (kg) } & 15,000 & 15,300 \\\text { Materials unit price } & \$ 3 & \$ 4 \\\text { Labour (hrs.) } & 12,000 & 11,250 \\\text { Labour rate per hour } & \$ 5 & \$ 5 \\\text { Power (kwh) } & 7,500 & 9,750 \\\text { Price per kwh } & \$ 2 & \$ 3\end{array}$
-Refer to the figure.By how much did profit change as a result of profitability changes in power?

• A)$18,000 decrease
• B)$6,750 decrease
• C)$2,250 decrease
• D)$2,250 increase

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