The Growth Accounting Formula Is Useful for Determining the Sources

question 79

Essay

The growth accounting formula is useful for determining the sources of productivity growth.
(A)Name the two sources of productivity growth,and write down the growth accounting formula.
(B)Explain why labor does not directly enter the formula.
(C)Suppose you were given the assignment of determining the sources of productivity growth for the past year.Explain briefly how you would do this in terms of the data you could expect to find.

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Definitions:

Overapplied Manufacturing Overhead

A situation where the allocated amount of manufacturing overhead costs exceeds the actual overhead costs incurred.

Unadjusted Cost of Goods Sold

The initial calculation of the cost of goods sold that has not been modified for returns, allowances, or discounts.

Overapplied Manufacturing Overhead

A scenario where the allocated manufacturing overhead costs exceed the actual overhead costs incurred, resulting in a credit balance.

Predetermined Overhead Rate

This is a rate used to allocate manufacturing overhead costs to individual units of production, based on a certain activity, such as labor hours or machine hours.