Concept explainers
Total factor productivity (continuation of 12-43). Refer to the data for Problem 12-43.
Assume the fabric costs $4.00 per yard In 2017 and $4.10 per yard in 2016.
- 1. Compute Gable Company’s total factor productivity (TFP) for 2017.
Required
- 2. Compare TFP for 2017 with a benchmark TFP for 2016 inputs based on 2017 prices and output.
- 3. What additional information does TFP provide that partial-productivity measures do not?
12-43 Partial-productivity measurement. Gable Company manufactures wallets from fabric. In 2016, Gable made 2,160,000 wallets using 1,600,000 yards of fabric. In 2016, Gable has capacity to make 2,448,000 wallets and incurs a cost of $8,568,000 for this capacity. In 2017, Gable plans to make 2,203,200 wallets, make fabric use more efficient, and reduce capacity.
Suppose that in 2017 Gable makes 2,203,200 wallets, uses 1,440,000 yards of fabric, and reduces capacity to 2,295,000 wallets at a cost of $7,803,000.
- 1. Calculate the partial-productivity ratios for materials and conversion (capacity costs) for 2017, and compare them to a benchmark for 2016 calculated based on 2017 output.
Required
- 2. How can Gable Company use the information from the partial-productivity calculations?
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Chapter 12 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
- This cost data from Hickory Furniture is for the year 2017. Using the high-low method, express the factory utility expenses as an equation where x represents number of chairs produced. Predict the utility costs if 900 chairs are produced. Predict the utility costs if 750 chairs are produced. Using Excel, create a scatter graph of the cost data and explain the relationship between number of chairs processed and utility expenses.arrow_forwardWachowski Company reported these cost data for the year 2017. Use the data to complete the following table. Total prime costs Total manufacturing overhead costs Total conversion costs Total product costs Total period costsarrow_forwardUsing the Microsoft 10K for the Fiscal Year ended June 30, 2018 to answer questions: 1. Interpret the results of 2018 "above the line" compared to 2017 "above the line" and then 2017 "below the line" and 2017 "below the line". 2. What is the revenue and cost streams of MSFT using the 10K. How are the costs allocated between the product and service streams? 3. What are the revenue recognition policy of MSFT?4. What are some examples of the revenue recognition for each area as mentioned in the report?5. What is the EBIT and EBITDA for MSFT for 2018 and 2017? How did you calculate this? 6. Using the MSFT financial statements, what is the variance for the balances listed below). The answer must include: % change from 2017 to 2018$ change from 2017 to 2018please state whether it is a favorable or unfavorable variance from 2017 to 2018 Cost of services Selling, general, administration and other Gross Profit of services Gross Profit of products 7. In the financial statement, what is the…arrow_forward
- Compute the Productivity Component indicate if favorable/(unfavorable). PROBLEM: Financial Perspective Gloria Corporation presents the following information for year 2020 & 2021 2020 2021 Sales P 45, 000 P 38, 000 Production Expenses Direct materials 12,000 9, 504 Direct labor 10,000 8, 976 Factory overhead Gross Profit 5, 000 5, 000 P 18, 000 P 14, 520 Operating Expenses Operating income 13,000 13, 000 P5, 000 P1, 520 During the year 2020, the corporation was able to sell 10, 000 units which is 25% above the sales in 2021. The same capacity was used for factory overhead and operating expenses for years 2020 and 2021. Other data are as follows: 2020 2021 Raw materials used ( kg) 1, 200 720 Direct labor hours 1, 000 816arrow_forwarda) Classify each cost element as either fixed, variable, or mixed b) Calculate: (i) the variable production cost per unit and the total fixed production overhead. (ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable components. c) Assuming sales of 5,000 units, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly showing contribution and net income.arrow_forwardDid Neuro Instruments achieve the target manufacturing cost per unit for HJ6 in 2017? Explain.arrow_forward
- Required: a) Classify each cost element as either fixed, variable, or mixed b) Calculate: i) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable components c) Assuming sales of 5,000 units, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly showing contribution and net income.arrow_forward1. If the company uses absorption costing ,variable costing and super-variable costing What is the product cost per unit for 2020? . What is the 2020 net operating income? Please answer all the three methodsarrow_forwardThroughput Costing (continuation of 9-32) Prepare an income statement under throughput costing for the year ended December 31, 2017 for Garvis Company Reconcile the different between the contribution margin and throughput margin for Garvis in 2017. Then reconcile the operating income between variable costing and throughput costing for Garvis in 2017. Advocates of throughput costing say it provides managers less incentive to produce for inventory than either variable costing or, especially, absorption costing. Do you agree? Why or why not? Under what circumstances might you recommend that Garvis use throughput costing? Reference Problem:arrow_forward
- Comparison of variable costing and absorption costing. Gammaro Company uses standard costing. Tim Sweeney, the new president of Gammaro Company, is presented with the following data for 2017:arrow_forwardThe Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available: Year Mugs Produced Labor-Hours Labor Cost 2012 1,150 850 $ 8,400 2013 1,600 975 $ 9,000 2014 1,100 800 $ 7,900 2015 2,100 1,150 $10,700 2016 1,500 950 $ 9,700 2017 1,300 875 $ 9,900 Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection. Develop an equation for labor costs using the high-low method of cost estimation, and predict total costs for an annual usage of 2,500 labor hours.arrow_forwardCompute the manufacturing cycle efficiency for an order for 2016 and 2017.arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College