Answer :
1) The productivity of materials is approximately 2.29 units per pound, 2)the productivity of materials is approximately 1.97 units per pound and 3)the productivity of overhead is approximately $0.13 of revenue per dollar of overhead expense.
1) To calculate the efficiency of materials, we divide the number of units created by the sum of raw materials utilized:
Productivity of materials = Units produced / Pounds of raw materials
In this case, the company produces 1,213 units of output per hour using 530 pounds of raw materials:
Productivity of materials = 1,213 / 530 ≈ 2.29
Therefore, the productivity of materials is approximately 2.29 units per pound.
2) Using the same formula as above, we can calculate the productivity of materials:
Productivity of materials = Units produced / Pounds of raw materials
In this case, the company produces 1,123 units of output per hour using 570 pounds of raw materials:
Productivity of materials = 1,123 / 570 ≈ 1.97
Therefore, the productivity of materials is approximately 1.97 units per pound.
3) To calculate the productivity of overhead, we divide the revenue generated by the overhead expense:
Productivity of overhead = Revenue / Overhead expense
In this case, the company sells finished units for $129 each and the overhead is charged at 1.6 times the labor expense. The labor cost is calculated by duplicating the number of workers by their hourly wage:
Labor expense = Number of workers * Hourly wage
Labor expense = 34 * $18 = $612
Overhead expense = 1.6 * Labor expense
Overhead expense = 1.6 * $612 = $979.20
Productivity of overhead = Revenue / Overhead expense
Productivity of overhead = $129 / $979.20 ≈ 0.13 ($/$)
Therefore, the productivity of overhead is approximately $0.13 of revenue per dollar of overhead expense.
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