Productivity Measures
Refer to the data in Exercise 18 29 (McKinley Industries). From the accounting records, you also gather the following information for the two years:
Required
a. Compute the total factor productivity measures for year 1 and year 2 based on the three inputs (material, labor, and overhead).
b. Comment on the results.
c. Describe briefly the advantages and disadvantages of the total factor productivity relative to the partial measures computed in Exercise 18 29. Would it be useful to report both?
Exercise 18 29: Partial Productivity Measures
As the cost accounting manager at McKinley Industries (MI), you are responsible for compiling and reporting various performance measures to the senior managers. MI instituted many efficiency improvement programs recently and the CFO has asked you to measure and report partial productivity for both labor and materials. Data for the last two years follow:
|
|
Year 2 |
Year 1 |
|
Gallons input |
45,000 |
40,000 |
|
Labor hours |
50,000 |
38,000 |
|
Output (gallons) |
25,000 |
20,000 |
Required
a. Compute the partial productivity measures for labor for year 1 and year 2.
b. Compute the partial productivity measures for material for year 1 and year 2.
c. Comment on the results. Have the efficiency improvement programs resulted in greater productivity?