TASK I- MO - ZYCHOL CHEMICALS CORPORATION Bob Richards the...

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ZYCHOL CHEMICALS CORPORATION Bob Richards, the production manager of Zychol Chemicals, in Houston, Texas, is preparing his quarterly report which is to include a productivity analysis for his department. One of the inputs is production data prepared by Sharon Walford, his operations analyst. The report, which she gave him this morning, showed the following: 2000 2001 Production (units) 4,500 6,000 Raw Material Used (barrels of petroleum by-products) 700 900 Labor Hours 22,000 28,000 Capital Cost Applied To The Department ($) 375,000 620,000 Bob knew that his labor cost per hour had increased from an average of $13.00 per hour to an average of $14.00 per hour, primarily due to a move by management to become more competitive with a new company that had just opened a plant in the area. He also knew that his average cost per barrel of raw material had increased from $320 and $360. He was concerned about the accounting procedures that increased his capital cost from $375,000 and
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