A company offers ID theft protection using leads obtained from client banks. Thr
ID: 389007 • Letter: A
Question
A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $30 per hour per employee. Each employee identifies an average of 4,000 potential leads a week from a list of 4,700. An average of 4 percent of potential leads actually sign up for the service, paying a one-time fee of $65. Material costs are $1,400 per week, and overhead costs are $10,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.) Multifactor productivity
Explanation / Answer
Solution:
Multifactor productivity is calculated as,
Multifactor productivity = Total fees generated / Total input in dollars
Total fees generated = (Number of employees x Potential leads x Conversion rate x Fee amount)
Total fees generated = (3 x 4000 x 4% x $65)
Total fees generated = $31,200
Total input in dollars = (Labor costs + Material costs + Overhead costs)
Total input in dollars = [(Number of employees x Working hours per week x Pay rate) + Material costs + Overhead costs]
Total input in dollars = [(3 x 40 hours x $30) + $1,400 + $10,000]
Total input in dollars = $15,000
Putting the calculated values in the multifactor productivity formula, we get,
Multifactor productivity = Total fees generated / Total input in dollars
Multifactor productivity = $31,200 / $15,000
Multifactor productivity = 2.08
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