Question

Profile Productivity Measurement Objective

In 20x2, Choctaw Company implements a new process affecting labor and materials. The following reported data are provided to evaluate the effect on the company’s productivity:

	20x1	20x2
Number of units produced	660,000	450,000
Labor hours used	220,000	112,500
Materials used (lbs.)	2,200,000	1,285,714

Required:

1. Calculate the productivity profile for 20x1. If required, round your answers to two decimal places.

Partial Operational Productivity Ratios	20x1 Profile
Labor productivity ratio
Material productivity ratio

2. Calculate the productivity profile for 20x2. If required, round your answers to two decimal places.

Partial Operational Productivity Ratios	20x2 Profile
Labor productivity ratio
Material productivity ratio

3. What if the labor hours used in 20x2 were 150,000? What does comparison of the 20x1 and 20x2 profiles now communicate? If required, round your answers to two decimal places.

Partial Operational Productivity Ratios	20x1 Profile	20x2 Profile
Labor productivity ratio
Material productivity ratio

Answer 1

1. For 20X1:

(A) Labor productivity ratio = Units produced / Labor hours used = 660,000 / 220,000 = 3 units per labor hour

(B) Material productivity ratio = Units produced / Material used = 660,000 / 2,200,000 = 0.30 units per pound

2. For 20X2:

(A) Labor productivity ratio = 450,000 / 112,500 = 4 units per labor hour

(B) Material productivity ratio = 450,000 / 1,285,714 = 0.35 units per pound

3. Labor productivity ratio = 450,000 / 150,000 = 3.00 units per labor hour

Material productivity ratio remains unchanged.