A company offers ID theft protection using leads obtained from client banks. Thr

Question

A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads at a pay rate of $20 per hour per employee. Each employee identifies an average of 3, 500 potential leads a week from a list of 5, 100. An average of 6 percent of potential leads actually sign up for the service, paying a one-time fee of $70. Material costs are $1 100 per week and overhead costs are $7,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. Multifactor productivity, |

Explanation / Answer

Multifactor productivity = (Possible Leads*No of workers*Fee*conversation percentage)/(labor cost + material cost + overhead cost)

Possible leads = 3,500 leads

No of employees = 3

Fee = $70

conversation percentage =6%= 0.06

Labor cost = 3employees*40hours*20per hour = $2400

Material cost = $1,100 per week

Overhead cost = $7000

Multifactor productivity = (3,500*3*70*0.06)/(2,400+1,100+7000) = 44100/10500= 4.2

Multifactor productivity = 4.2 per dollar of input

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