At the end of 2014, Immaculate Productions 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?
Definitions:
Relative To GDP
A comparison or ratio used to understand a specific financial metric or economic indicator in the context of a country's total gross domestic product.
Federal Government
The national government of a federal country, such as the United States, responsible for enacting and enforcing laws applicable across all states and territories.
Expenditures
Refers to the amount of money spent by either an individual, business, or government on goods and services.
Budget Deficit
The financial situation in which government expenditures exceed revenues.
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