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A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improvements. Assume that Chester had a productivity index of 112% and that Digby had a productivity index of 103%. Now refer to the Income Statements in the Annual Report for Chester and Digby. Using the labor costs shown in the Income Statements, how much more did Chester save in direct labor costs compared to Digby by having a higher productivity index?
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