Productivity

Q1 Collins Title wants to evaluate its labor and multifactor productivity with a new
computerized title-search system The company has as staff of four, each working 8 hours per
day( for a payroll cost for $ 640/day) and overhead expenses of $ 400/day Collin processes
and closes on 8 titles each day The new computerized title-search system will allow the
processing of 14 titles per day

Although the staff, their work hours, and pay are the same, the overhead expenses are now $
800 per day

Approach: Collins uses concept of labour productivity and multifactor productivity to

evaluate productivity

If the overhead goes to $960 (rather than $ 800), what is the multifactor productivity?

Q2 At Modern Lumber ,Inc, Art Binley, president and producer of apple crates sold to
growers has been able , with his current equipment , to produce 240 crates per 100 logs He
currently purchases 100 logs per day and each log requires 3 labor-hours to process He
believes that he can hire a professional buyer who can buy a better quality log at the same
cost If this is the case, he can increase his production to 260 crates per 100 logs His labor-
hours will increase by 8 hours per day

What will be the impact on productivity( measured in crates per labor-hour) if the buyer is
hired?