The manager of a crew that installs wood floors has tracked the crew\'s output o
ID: 467247 • Letter: T
Question
The manager of a crew that installs wood floors has tracked the crew's output over the past two weeks. Each worker works 40 hours per week, and earns $15 per hour. The wholesale cost of lumber to the company is $9 per square foot, and the company charges its customers 520 per square foot of flooring installed. a. Calculate labor productivity for each week. b. Suppose that in addition to labor cost and wholesale lumber cost, the firm's overhead is 100% of its labor cost. Calculate multifactor productivity for each week.Explanation / Answer
a)
Week 1
Total output = 420*20
= $ 8400
total labor hours = 4*40
=160
labor productivity = $52.5 per hour
Week 2:
Total output = 325*20
= $ 6500
total labor hours = 3*40
=120
labor productivity = $54.16 per hour
b)
Week 1
Total output = 420*20
= $ 8400
total labor cost = 4*40*15
=$2400
cost of material used =9*480
= $4320
Overhead = $2400 (100% of labor cost)
Multifactor productivity = 8400/(2400+4320+2400)
= 0.92
Week 2:
Total output = 325*20
= $ 6500
total labor cost = 3*40*15
=$1800
material cost = 371*9
=$3339
Overhead cost = $1800
Multifacror productivity = 6500/(1800+1800+3339)
= 0.93
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