Question

Goetz Company manufactures wallets from fabric. In 2016, Goetz made 2,700,000 wallets using 1,875,000 yards of fabric. In 2016, Goetz has capacity to make 3,600,000 wallets and incurs a cost of $12,600,000 for this capacity. In 2017, Goetz plans to make 3,348,000 wallets, make fabric use more efficient, and reduce capacity. Suppose that in 2017 Goetz makes 3,348,000 wallets, uses 2,160,000 yards of fabric, and reduces capacity to 3,100,000 wallets at a cost of $8,990,000. Read the Fequirements. Requirement 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 To assist you, use the popup to identify the various components of the formulas. (Click to view the components you will use in your formulas.) Begin by determining the formula for the direct materials partial-productivity ratio in 2017, then complete the calculation. (Round the ratio to three decimal places.) 2017 Direct materials partial productivity

Answer 1

Productivity ratio is the ratio between the actual amount of output produced and the amount of resources used in the process of production. Enhanced productivity leads to higher production, cost reduction & increased profits. Partial productivity is defined as the ratio of output to a particular class of input. It is used to select such areas where there is a need for improvement. Partial productivity = Output/A specific class of input Materials productivity in 2016 = 27,00,000/18,75,000 1.44 wallets per yard of fabric Materials productivity in 2017 = 33,48,000/21,60,000 1.55 wallets per yard of fabric Conversion(capacity costs) productivity in 2016 = 1,26,00,000/36,00,000 3.5 Conversion(capacity costs) productivity in 2017 = 89,90,000/31,00,000 2.9 ANALYSIS It is very evident from the above that materials productivity has increased from 1.44 to 1.55 in 2017 a scompared to 2016. However, the conversion(capacity costs) productivity has been reduced from 3.5 to 2.9 in 2017 in comparison to 2016.