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.What is the total change in profits from 20X1 to 20X2?
A)$33,300
B)$60,000
C)$180,000
D)$243,300

Question

Quizplus · Accepted Answer

The total change in profits is calculated by finding the difference in total revenue and total costs between 20X1 and 20X2. The revenue increased by $60,000 (from $300,000 to $360,000). The cost of materials increased by $15,900, labor costs decreased by $3,750, and power costs increased by $15,750. The net change in costs is $26,700. Therefore, the total change in profits is $60,000 - $26,700 = $33,300.

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