Q1. (Total 25 points) Joanna is currently working a total of 8 hours per day to
ID: 390894 • Letter: Q
Question
Q1. (Total 25 points) Joanna is currently working a total of 8 hours per day to produce 280 dolls. She thinks that by changing the paint used for the facial features and fingernails, she can increase the rate to 350 dolls per day. Total material cost for each doll is approximately S3.50; she has to spend $40 in the necessary supplies (expendables) per day; energy costs are assumed to be only $4.00 per day; and she makes $10 per hour for her time. a) Viewing this from a multifactor productivity perspective by taking all the given inputs into consideration, what is her productivity at present and the one with the new paint in terms of dolls per dollar? (15 points) b) If she uses the new paint, by what amount could Joanna's material costs per doll increase without reducing the present multifactor productivity? (10 points)Explanation / Answer
Currently
Using the new paint
Labor
8 hrs * $10
= $80
8 hrs * $10
= $ 80
Material
280 * $3.50
= $980
350 * $3.50
= $1225
Supplies
= $ 40
= $ 40
Energy
= $ 4
= $ 4
Total Inputs
= $1104
= $1349
Productivity
280/1104
= 0.254
350/1349
= .26
Answer:- productivity with current paint= 0.254
Productivity with new paint = 0.26
Answer:- We want to know how high the material cost could go, using the new paint, before the productivity drops to the current level of 0.25. In mathematical terms we make the material cost a variable (X), set the new multifactor productivity value to the current level, 0.25, and solve for X.
350/(($12x10) + 350 $(X) + $20 + $4) = 0.25
350 = 0.25($120 + 350$(X) + $20 + $4)
350 = $30 + 87.5$(X) + $5 + $1
314 = 87.5$(X)
$(X)= 314/87.5 = $3.59
It follows then that the new paint could raise Materials cost by no more than approximately $0.09 (the difference between $3.59 and $3.50) before Ms. French would experience a decrease in multifactor productivity.
Currently
Using the new paint
Labor
8 hrs * $10
= $80
8 hrs * $10
= $ 80
Material
280 * $3.50
= $980
350 * $3.50
= $1225
Supplies
= $ 40
= $ 40
Energy
= $ 4
= $ 4
Total Inputs
= $1104
= $1349
Productivity
280/1104
= 0.254
350/1349
= .26
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