Question

Interperiod Measurement of Productivity Profiles Helena Company needs to increase its profits and so has embarked on a program to increase its overall productivity. After one year of operation, Kent Olson, manager of the Columbus plant, reported the following results for the base period and its most recent year of operations: 20x1 20x2 Output 185,200 217,600 Power (quantity used) 18,520 10,800 Materials (quantity used) 46,300 48,000 Required: 1. Compute the productivity profiles for each year. If required, round your answers to two decimal places. 20x1 20x2 Power Materials 2a. Did productivity improve? 2b. Explain why or why not.

Answer 1

For 2001

Productivity ratio of power = Output/Power quantity used

= 185,200/18,520

= 10

Productivity ratio of material = Output/Material quantity used

= 185,200/46,300

= 4

For 2002

Productivity ratio of power = Output/Power quantity used

= 217,600/10,800

= 20.15

Productivity ratio of material = Output/Material quantity used

= 217,600/48,000

= 4.53

	2001	2002
Power	10	20.15
Materials	4	4.53

2a)

Yes, the productivity improved in year 2002.

2b)

Productivity ratios for power and materials have increased in year 2002, hence productivity improved in 2002.

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