Catering Company Last Year This year Volume of materials used 12,000 units 14,00
ID: 455580 • Letter: C
Question
Catering Company
Last Year This year
Volume of materials used 12,000 units 14,000 units
Average raw materials cost $9.00/unit $11/unit
Labor hours used: 21,000 hours 19,500 hours
Cost of labor: $14 per hour $14.50 per hour
Energy $20,000 $22,000
Other overhead costs $5,000 $8,000
Quantity sold 90,000 units 95,000 units
Selling price $12/unit $12.50/unit
(a) Determine the partial productivity for labor for each year.
(b) Determine multi-factor productivity for labor & materials for each year.
(c) Determine the total factor productivity for each year.
(d) The manager believes that increased labor cost is having adverse effect on the
firm’s overall productivity. Do you agree? (Please support your answer with appropriate computations).
Explanation / Answer
d) No increased labor cost has not adversely affected. labor cost/hr has risen but the company has used lesser number of hours for production. Labor productivity last year was 3.67 and this year it has improved to 4.2
a) Partial labor productivity Last Year This Year Labor hours 21000 19500 Cost of labor 14 14.5 Input in dollars 294000 282750 Output Qty sold 90000 95000 Selling Price 12 12.5 Output dollars 1080000 1187500 partial Labor productivity=output/Input Last Year This Year Last Year 1080000/294000= 3.67 This Year 1187500/282750= 4.20Related Questions
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