Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires

ID: 410147 • Letter: L

Question

Lillian Fok is president of Lakefront Manufacturing,

a producer of bicycle tires. Fok makes 1,200 tires per day with the

following resources.

Labor: 400 hours per day @ $12.50 per hour

Raw material: 21,000 pounds per day @ $1.50 per pound

Energy: $5,000 per day

Capital costs: $10,250 per day

a) Labor productivity per labor hour for these tires =

tires/labor hour (round your response to two decimal places).

b) Multifactor productivity for these tires =

tires/dollar (round your response to four decimal places).

c) The percent change in multifactor productivity if Fok can reduce the energy bill by

$1,000

per day without cutting production or changing any other inputs =

(enter your response as a percentage rounded to two decimal places).

Note: calculate the new multifactor productivity to four decimal places before calculating the percentage change.

a. total working hours per day= 400 hours

total units produced per day= 1200

per hour labor production= tota units produced in a day/ number of working hours in the day

= 1200/400= 3 units per hour

b. multifactory productivity= output/ all inputs incost

labor cost= 400*12.50= $5000

material cost= 21,000*1.5= $31,500

energy+capital cost= 5000+10,250= 15,250

MFP= (5000+31500+15,250)/400= 51650/400= $129.125

c. if the cost reduced by 1000 per day= 50650/400= 126.625

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