Problem 1.14 Question Help Charles Lackey operates a bakery in ldaho Falls, daho
ID: 414953 • Letter: P
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Problem 1.14 Question Help Charles Lackey operates a bakery in ldaho Falls, daho. Because of s excelent product and excel en ocation deman has ncreased b. 5%,inthe ast year. On a too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,500 loaves per month. Employees are paid $8 per hour. In addition to the labor cost, Charles also has a constant utility cost per month of $500 and a per loaf ingredient cost of $0.35. Current multifactor productivity for 640 work hours per month = 0,244 loaves/dollar (round your response to three decimal places) After increasing the number of work hours to 992 per month, the multifactor productivity loaves/dollar (round your response to three decimal places).Explanation / Answer
Total output = 1500 loaves per month
Utility cost per month = $500
Ingredients cost per loaf = $0.35.So total ingredients cost per month = Total output x ingredients cost per loaf = 1500 x $0.35 = $525
a) If currently there is 640 work hours per month and employees are paid $8 per hour,
Labor cost = 640 hours x $8 = $5120
So total cost input = labor cost + utility cost + ingredient cost
= $5120 + $500 + $525
= $6145
Multifactor productivity = Total output / Total input
= 1500 loaves / $6145
= 0.244 loaves per dollar
b) If the number of work hours is increased to 992 per month, labor cost = 992 hours x $8 = $7936
Total cost input = labor cost + utility cost + ingredient cost
= $7936 + $500 + $525
= $8961
Multifactor productivity = Total output / Total input
= 1500 loaves / $8961
= 0.167 loaves per dollar
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