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Assume 40 hour weeks and an hourly wage of 12

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• Assume 40-hour weeks and an hourly wage of $12.

• Overhead is 1.5 times weekly labor cost.
• Material cost is $6 per pound.

Week Output (units) Workers Material (lbs)

1 30,000 6 450
2 33,600 7 470

P65 Problem Question #3

• Compute the multifactor productivity measure for each of the weeks sho
for production of chocolate bars.
• Assume 40-hour weeks and an hourly wage of $12.
• Overhead is 1.5 times weekly labor cost.
• Material cost is $6 per pound.

Week Output (units) Workers Material (lbs)

1 30,000 6 450
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12/03/2020
1 30,000 6 450
Assume 40 hour weeks and an hourly wage of 12 Overhead is 15 times weekly labor

2 33,600
Find study resources 7 470 🔍 싂

Week 1:
= 30,000 / (40*12*6) + [(40*12*6)*1.5] + (450*6) = 30,000 / 9900 = 3.030303

Week 2:
= 33,600 / (40*12*7) + [(40*12*7)*1.5] + (470*6) = 33,600 / 11220 = 2.994652

P65 Problem Question #4

• A company that makes shopping carts for supermarkets and other stores
recently purchased some new equipment that reduces the labor content
the jobs needed to produce the shopping carts.
• (OLD SYSTEM): Prior to buying the new equipment, the company used 5
workers, who produced an average of 80 carts per hour. Workers receive
per hour, and machine cost was $40 per hour.
• (NEW SYSTEM): With the new equipment, it was possible to transfer one
the workers to another department, and equipment cost increased by $1
per hour while output increased by 4 carts per hour.

• COMPUTE the multifactor productivity under EACH system (OLD & NEW)
carts per dollar cost (labor plus equipment ) as the measure.

• Comment on the changes in productivity according to the two measures.

P65 Problem Question #4

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P65 Problem Question #4
Assume 40 hour weeks and an hourly wage of 12 Overhead is 15 times weekly labor

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• (OLD SYSTEM): Prior to buying the new equipment, the company used 5
workers, who produced an average of 80 carts per hour. Workers receive
per hour, and machine cost was $40 per hour.
• (NEW SYSTEM): With the new equipment, it was possible to transfer one
the workers to another department, and equipment cost increased by $1
per hour while output increased by 4 carts per hour.

OLD SYSTEM:
= 80 / [(5*10) + 40] = 80 / 90 = 0.888889 cart per dollar

NEW SYSTEM:
= 84 / [(4*10) + 50] = 84 / 90 = 0.933333 cart per dollar

New SYSTEM > OLD SYSTEM

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