QUESTION 1 A Company that makes shopping carts for supermarkets and other stores

Question

QUESTION 1 A Company that makes shopping carts for supermarkets and other stores receatly purchased some new equipmeat that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 7 workers, who produced an average of 81 carts per bour. Workers receive S15 per hour, and machine coast was $50 per hour. With the new equipment, it was possible to r one of the workers to another department, and equipmeat cost increased by S12 per hour while output increased by four carts per hour. a) Compute the multifactor productivity (MFP) (labor plus equipmeat) under the Prior to buying the new equipment. The MFP (carts/s)- (rouad to 4 decimal places), b) Compute the productivity changes between the Prior to and after buying the new equipment. The productivity growth- % (round to 2 decimal places) QUESTION 2 Compute the multifactor productivity measure for an S hour day in which the usable output was 920 units, produced by 6 workers who used 354 pounds of materials. Workers have an hourly wage of 19 and material cost is 3.2 per pound. Overhead is 1.6 times labor cost. The multifactor productivity (units's)(TOund to 4 decimnl places) (round to 4 decimnl places) QUESTION 3 A health club has 2 employees who work on lead geueratiou. Each employee works 40 hours a week, and is paid 321 an hour. Each employee identifies an average of 250 possible leads a week from a list of 8,000 names. Approximately 10 perceat of the leads become mermbers and pay a one-time fee of $120. Material costs are $183 per week, and overhead costs are $1,105 per week. Calculate the multifactor productivity for this operatiou in fees geuerated per dollar of input. The multifactor productivity for this operation in fees generated pe dollar of input Cround to 4 decimal places)

Explanation / Answer

Q1.

(a)

Output per hour = 81 carts

Input ($) per hour = $15 x 7 (labor wages) + $50 (machine) = $155

So, MFP = 81 / 155 = 0.5226 carts / $

(b)

For the modified system,

Output per hour = 81+4 = 85 carts

Input ($) per hour = $15 x 6 (labor wages) + $50 (machine) + $12 (new equipment) = $152

So, MFP = 85 / 152 = 0.5592 carts / $

So, % increase in productivity = (0.5592 - 0.5226) / 0.5226 = 7.00%

Q2.

Output = 920 units

Input ($) = $19 x 6 x 8 (labor) + $3.2 x 354 (RM) + 1.6 x $19 x 6 x 8 (overhead) = $3504

MFP = 920 / 3504 = 0.2626 units per $

Q3.

Output ($) = 250 x 2 x 10% x $120 = $6,000

Input ($) = 2 x 40 x $21 (labor) + $185 (material) + $1,105 (overhead) = $2,970

MFP = 6000 / 2970 = 2.0202 fees generated per $

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