In calculating the profit linkage,PQ represents the productivity-neutral quantity of input.How is PQ calculated?
A)current period output/base period output
B)current period output/base period productivity ratio
C)prior period output/base period productivity ratio
D)current period output/standard quantity output

Question

Quizplus · Accepted Answer

PQ represents the productivity-neutral quantity of input. To calculate PQ, we need to divide current period output by the base period productivity ratio. Choice B, current period output divided by base period productivity ratio, is the correct formula for calculating PQ.

In Calculating the Profit Linkage,PQ Represents the Productivity-Neutral Quantity of Input.How