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 20X2?
A)$360,000
B)$213,300
C)$180,000
D)$146,700

Question

Quizplus · Accepted Answer

To calculate the profit for 20X2, we need to subtract the total costs from the total revenue.Total Revenue in 20X2 = Output * Output prices = 36,000 * $10 = $360,000Total Costs in 20X2 = (Materials costs) + (Labour costs) + (Power costs)Materials costs = Materials (kg) * Materials unit price = 15,300 * $4 = $61,200Labour costs = Labour (hrs.) * Labour rate per hour = 11,250 * $5 = $56,250Power costs = Power (kwh) * Price per kwh = 9,750 * $3 = $29,250Total Costs = $61,200 + $56,250 + $29,250 = $146,700Profit in 20X2 = Total Revenue - Total Costs = $360,000 - $146,700 = $213,300

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