Partial Financial Productivity ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute direct materials for direct manufacturing labor and vice versa....

Partial Financial Productivity ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute direct materials for direct manufacturing labor and vice versa. If workers cut the steel carefully, more parts can be manufactured from a metal sheet, but this requires additional direct manufacturing labor hours. Alternatively, ABC can use fewer labor hours if it is willing to tolerate more waste of direct materials. ABC decided to improve materials productivity this year and the following provides information for the current and prior year

Required Carry all computations to 4 digits after the decimal point. 1. Compute the partial financial productivity for both direct materials and direct labor for each of the 2 years. 2. Calculate ABC’s combined direct labor and direct material productivity in units per dollar in each of the 2 years. 3. Evaluate management’s decision to substitute one production factor for another.