Problem 2-3 Compute the multifactor productivity measure for each of the weeks s

Question

Problem 2-3

Compute the multifactor productivity measure for each of the weeks shown for production of chocolate bars. Assume 40-hour weeks and an hourly wage of $12. Overhead is 1.5 times weekly labor cost. Material cost is $7 per pound. (Round your answers to 2 decimal places.)

   

    

MFP (Output / Total Cost)

Compute the multifactor productivity measure for each of the weeks shown for production of chocolate bars. Assume 40-hour weeks and an hourly wage of $12. Overhead is 1.5 times weekly labor cost. Material cost is $7 per pound. (Round your answers to 2 decimal places.)

Explanation / Answer

Multifactor productivity = Output/(sum of $ values of all inputs)

There are 3 inputs: labor, overheads and materials.

$ value of labor = no. of workers*no. of hours in a week*hourly wage rate = no. of workers*40 hours*$12

Overhead cost = 1.5*weekly labor cost. Labor cost in week 1 = 1920. Thus overhead cost will be = 1.5*1920 = 2880

Last input is the materials cost. Total material cost = quantity of materials used*material cost ($ 7 per lbs)

Now total cost of inputs = labor+overheads+material costs

Now MFP = Output/Total cost

Week Workers Total hours (no. of workers*40) Labor cost (total hours*$12) 1 4 160 1,920 2 7 280 3,360 3 7 280 3,360 4 9 360 4,320

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