At the end of 20X1, Gilley Company implemented a new labour process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 20X2, the president of the company wants an assessment of the changes on the company’s productivity. The data needed for the assessment are as follows:
$\begin{array}{lrr}
&20 \times 1 & 20 \times 2\
\text { Output } & 30,000 & 36,000 \
\text { Output prices } & \$ 10 & \$ 10 \
\text { Materials (kg) } & 15,000 & 15,300 \
\text { Materials unit price } & \$ 3 & \$ 4 \
\text { Labour (hrs.) } & 12,000 & 11,250 \
\text { Labour rate per hour } & \$ 5 & \$ 5 \
\text { Power (kwh) } & 7,500 & 9,750 \
\text { Price per kwh } & \$ 2 & \$ 3
\end{array}$
-Refer to the figure.How much profit was generated in 20X1?
A)$300,000
B)$213,300
C)$180,000
D)$120,000

Question

Quizplus · Accepted Answer

To calculate the profit for 20X1, we need to subtract the total costs from the total revenue. The total revenue is the output multiplied by the output prices, and the total costs include the costs of materials, labor, and power.Total revenue for 20X1 = 30,000 units * $10/unit = $300,000.Total costs for 20X1:- Materials cost = 15,000 kg * $3/kg = $45,000.- Labor cost = 12,000 hours * $5/hour = $60,000.- Power cost = 7,500 kwh * $2/kwh = $15,000.Total costs = $45,000 + $60,000 + $15,000 = $120,000.Profit for 20X1 = Total revenue - Total costs = $300,000 - $120,000 = $180,000.

At the End of 20X1, Gilley Company Implemented a New