Partial productivity measurement. Gerhart Company manufactures wallets from fabric. In 2011, Gerhart made 2,520,000 wallets using 2,000,000 yards of fabric. In 2011, Gerhart has capacity to make 3,307,500 wallets and incurs a cost of $9,922,500 for this capacity. In 2012, Gerhart plans to make 2,646,000 wallets, make fabric use more efficient, and reduce capacity. Suppose that in 2012 Gerhart makes 2,646,000 wallets, uses 1,764,000 yards of fabric, and reduces capacity to 2,700,000 wallets, incurring a cost of $8,370,000 for this capacity.
Required
1. Calculate the partial-productivity ratios for materials and conversion (capacity costs) for 2012, and compare them to a benchmark for 2011 calculated based on 2012 output.
2. How can Gerhart Company use the information from the partial-productivity calculations?