Refer to the data for Problem 13-43. Assume the fabric costs $4.40 per yard in 2020 and
Question:
Refer to the data for Problem 13-43. Assume the fabric costs $4.40 per yard in 2020 and $4.55 per yard in 2019.
Data From Problem 13-43
Goldstein Company manufactures wallets from fabric. In 2019, Goldstein made 2,700,000 wallets using 1,875,000 yards of fabric. In 2019, Goldstein has capacity to make 3,600,000 wallets and incurs a cost of $10,800,000 for this capacity. In 2020, Goldstein plans to make 3,348,000 wallets, make fabric use more efficient, and reduce capacity. Suppose that in 2020 Goldstein makes 3,348,000 wallets, uses 2,160,000 yards of fabric, and reduces capacity to 3,100,000 wallets at a cost of $10,540,000.
Required
1. Compute Goldstein Company’s total factor productivity (TFP) for 2020.
2. Compare TFP for 2020 with a benchmark TFP for 2019 inputs based on 2020 prices and output.
3. What additional information does TFP provide that partial-productivity measures do not?
Step by Step Answer:
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 9780135628478
17th Edition
Authors: Srikant M. Datar, Madhav V. Rajan