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Below is shown the weekly output of a fabrication process and data for labor and material inputs Answer

Below is shown the weekly output of a fabrication process and data for labor and material inputs. Note the following:   – Standard selling price is $125 per unit.  – Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost.  – Hourly wage is $16 in a 40-hour week. – Material cost is $10 per foot.

Week Output # Workers Material (ft)
1 392 5 2790
2 408 6 2790

What is the average multifactor productivity?

Ans: Multifactor productivity Indicates the ratio of many or all resources (inputs) to the goods and services produced (outputs).

Multifactor productivity for week 1

Labor Cost = 16 * 40 *5 = $ 3200

Material Cost = 2790 * 10 = $ 27900

Overhead Cost = 1500 + 0.5 *3200 = 1500 + 1600 = $3100

=   392 / ( 3200 + 27900 + 3100) = 392/34200 = 0.01146 units output per dollar Cost

 

Multifactor productivity for week 12

Labor Cost = 16 * 40 *6 = $ 3840

Material Cost = 2790 * 10 = $ 27900

Overhead Cost = 1500 + 0.5 *3840 = 1500 + 1920 = $3420

=   408 / ( 3840 + 27900 + 3420) = 408 / 35160 = 0.01160 units output per dollar Cost

 

average multifactor productivity = (0.01146 + 0.01160)/ 2 = 0.01153 units output per dollar Cost

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