David Upton is president of Upton Mafacturing, a producer of Go-Kart tires. Upto

Question

David Upton is president of Upton Mafacturing, a producer of Go-Kart tires. Upton makes 1,200 tires per day with the following resources 400 hours per day @$12.00 per hour Labor. Raw Matena 21,000 pounds per day Energy Capital: $1.00 per pound $5,000 per day $10,250 per day a Labor productivity per labor hour for these tires-tireslabor hour (round your response to two decimai places) b) Multtactor productivity Tor these tires = | | tres/dollar (round your response to tour decimal places) c) The percent change in multifactor productivity if Upton can reduce the energy bill by $950 per day without cutting production or changing any other inputs%your response as a percentage rounded to two decimal places Note: caiculate the new multifactor productivity to four decimai places before caiculating the percentage change

Explanation / Answer

a)

Labor productivity per labor hour = Total tires produced per day/Labor hours per day = 1200/400 = 3 tires/labor hour

b)

Multifactor Productivity = Total tires produced per day/Total cost

Total cost = 400 * $12 + 21,000 * $1 + $5,000 + $10,250 = $4,800 + $21,000 + $5,000 + $10,250 = $41,050

Multifactor Productivity = 1200/41,050 = 0.0292

c)

New total cost = $4,800 + $21,000 + $950 + $10,250 = $37,000

New Multifactor Productivity = 1200/37,000 = 0.0324

Difference = 0.0324 - 0.0292 = 0.0032

Hence, Percent change = 0.0032/0.0292 = 10.96%

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