QUESTION 4 A Company that makes shopping carts for supermarkets and other stores
ID: 377361 • Letter: Q
Question
QUESTION 4 A Company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 5 workers, who produced an average of 77 carts per hour. Workers receive S11 per hour, and machine coast was $47 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $14 per hour while output increased by four carts per hour a) Compute the multifactor productivity (MFP) (labor plus equipment) under the Prior to buying the new equipment. The MFP (carts S) (round to 4 decimal places) b) Compute the % growth in productivity between the Prior to and after buying the newt quipment. The growth in productivity- % (round to 2 decimal places)
Explanation / Answer
Prior to introduction of new equipment :
Number of carts produced = 77 per hour
Total wage bill of workers per hour = $ 11 / worker. hour x 5 workers = $55
Machine cost = $47 / hour
Thus total cost of labour and machine per hour = $55 + $47 = $102
Hence, Multifactor productivity = 77/ 102 = 0.7549 / $ ( rounded to 4 decimal places )
MULTIFACTOR PRODUCTIVITY PRIOR TO BUYING THE EQUIPMENT ( CARTS/ $) = 0.7549/$
After introduction of new equipment :
Revised output = 77 + 4 = 81 / hour
Number of workers = 5 – 1 = 4
Equipment cost = $47 + $14 = $61 / hour
Total wage bill of workers per hour = $ 11 / worker. hour x 4 workers = $44
Machine cost = $61 / hour
Thus total cost of labour and machine per hour = $44 + $61 = $105
Hence Multifactor productivity
= Number of carts produced per hour/ Total cost of labor and machine per hour
= 81 / 105
= 0.7714 / $
Thus growth rate in productivity
= ( New productivity – Old productivity ) / Old productivity x 100
= ( 0.7714 – 0.7549) / 0.7549 x 100
= 2.185 % ( 2.19%)
THE GROWTH IN PRODUCTIVITY = 2.19%
MULTIFACTOR PRODUCTIVITY PRIOR TO BUYING THE EQUIPMENT ( CARTS/ $) = 0.7549/$
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.