Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-
40 Sales Variances; Quarter to Quarter (20 min)
1. Contribution Income Statement for Hathaway
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2. The volume variances for each product are shown above:
In Sales Dollars:
Starlight: $3,500 (U) = [(.2 x 12,000) – (.25 x 10,000)] x $35
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Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-40 (continued -1)
3. The mix and quantity variances for each product are shown below;
note that the total of the sales mix and quantity variance equals the volume
variance
Sales Mix Variances
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Sales Mix Sales Quantity Volume
Contribution Margin
Variance Variance Variance
Starlight (7,800)$ 6,500$ (1,300)$
Moonlight 25,200 63,000 88,200
Total 17,400$ 69,500$ 86,900$
Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
PROBLEMS
16-41 Partial Operational Productivity (15 min)
1. Operational Partial Productivity
2. Productivity of direct material, CT140, deteriorated from 0.9524 in
2015 to 0.833 in 2016. Productivity of direct labor, however,
remained the same for 2015 and 2016. Note however that, while
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Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-42 Partial Financial Productivity (30 min)
1.,2.,3. See spreadsheet solution below:
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Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-42 (continued-1)
1.
2. Direct material productivity financial partial productivity deteriorated
3. The partial financial productivity ratios are calculated and compared
in the spreadsheet above.
4. The decompositions suggest that changes in financial productivity
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Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-43 Total Productivity (15 min)
1. Total productivity in units
2016 2015
(a) Total units manufactured: 750,000 1,000,000
(b) Total variable manufacturing
costs incurred (see 16-42):
(c) Total productivity: (a) / (b) 0.005040 0.006487
(d) Change in productivity:
2. Financial partial productivity measures indicate that the changes in
productivity for direct materials and direct labor are in opposite
directions. The firm maintained its direct labor productivity while its direct
Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-44 Operational and Financial Partial Productivity (45 min)
1. Colditz Company
Comparative Income Statement
For the years ended
Current year Prior year
Sales 20,000 x $40 = $800,000 16,000 x $40 =$640,000
Variable cost of sales:
Materials 14,000 x $10 = $140,000 13,000 x $8 = $104,000
Labor 5,250 x $25 =131,250 6,000 x $20 = 120,000
Power 2,000 x $2 = 4,000 1,000 x $2 = 2,000
2.3., See spreadsheet on following sheet.
4. Both direct materials and direct labor operational partial productivity
improved from the prior year to the current year. In the current year the
firm was able to manufacture more output units for each unit of materials
placed into production and for each hour spent on production. The
operational productivity of power in the current year deteriorated from
that of the prior year. It is likely that the firm used more equipment in
production in the current year that reduced consumption of materials
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Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-44 (continued -1)
Chapter 16 – Operational Performance Measurement: Further Analysis of Productivity and Sales
16-44 (continued -2)
5. See spreadsheet above.
6. Productivity for both direct materials and direct labor improved in the
current year. The percentages of improvements in productivity are
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