As the cost accounting manager at McKinley Industries (MI), you are responsible for compiling and reporting various performance measures to the senior managers. MI instituted many efficiency improvement programs recently and the CFO has asked you to measure and report total factor productivity based on three inputs (material, labor , and overhead). From the accounting records, you also gather the following information for the two years:

	Year 1	Year 2
Gallons input	45,200	40,500
Labor hours	50,100	39,300
Output (gallons)	26,500	20,100

	Year 2	Year 1
Cost of inputs per gallon	$69	$72
Wage rate per hour	$18	$5
Total manufacturing overhead	$2,870,000	$3,090,000
Selling price of output per gallon	$380	$348

Compute the total factor productivity measures for year 1 and year 2 based on the three inputs (material, labor, and overhead).

Answer rating: 100% (QA)

Total Factor Productivity TFP measures how efficiently inputs are used to produce outputs It is calc... View the full answer