Exercise 15.15 (Algorithmic)Interperiod Measurement of Productivity, Profit-Linked MeasurementHelena
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Exercise 15.15 (Algorithmic)Interperiod Measurement of Productivity, Profit-Linked MeasurementHelena Company needs to increase its profits and so has embarked on a program to increase its overallproductivity. After one year of operation, Kent Olson, manager of the Columbus plant, reported thefollowing results for the base period and its most recent year of operations:2014 2015 Output 185,500 216,600 Power (quantity used) 23,188 10,800 Materials (quantity used) 37,100 47,500 Suppose the following input prices are provided for each year:2014 2015 Unit price (power) $2 $3 Unit price (materials) 18 17 Unit selling price 10 12 Required:1. Compute the profit-linked productivity measure. By how much did profits increase due to productivity?$ 2. Calculate the price-recovery component for 2015.$
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