Zychol Chemical Industry
He was concerned about the accounting procedure that increased his capital cost from $375,000 to $620,000, but earlier discussion with his boss suggested that there was nothing that could be done about the allocation. Bob wondered if his productivity had increased at all. He called Sharon into the office and conveyed the above information to her and asked her to prepare this part of the report. Solution of Part-1: mr. Richard probably in this part expect some analysis of productivity inputs for all factors, as well as a Multifactor Analysis for both year with change in the productivity(up^ and downv) and the amount noted.
So from the multifactor productivity analysis Mr. Richard finally concluded that there is decrease v in the productivity. Because there is increase in Material, Labor, but Capital do not increase. The net accurate is negativity change in productivity which means decrease v in productivity. This can be mathematically proved as; 2007/2006 ? 100 = 88.
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38 % = 88. 38 % 4. 49/ 5. 08 ? 100 Solution of Part-2: In this part by increasing producer price index (PPI) form 120 to 125. Mr Richards decision was seemed that this cost is too high.
Solution of Part-3: The manager did not reach the goal. An analysis of the change in capital is warranted. Multifactor analysis of productivity as shown in question No 1 clearly proves that productivity is not positive although Labor & Material productivity is favorable which means they increase in both cases multifactor productivity analysis as well as by increasing producer price index (PPI) while the capital which is also the part of input decreases v in both cases. Multifactor reduces 88. 3% in first case.