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 $12 per hour per employee. Each employee identifies an average of 3,400 potential leads a week from a list of 4,800. An average of 7 percent of potential leads actually sign up for the service, paying a one-time fee of $90. Material costs are $1,400 per week, and overhead costs are $8,900 per week.

Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.)

Multifactor productivity ???

Answer 1

In order to find the multifactor productivity, we will use the following formula:
Productivity = Total output / Total input

We have the following values:

No. of workers = 5
Hours worked = 40
Wage paid per worker = 12
Total wage paid = 2400
Total cost of material = 1400
Overhead cost = 8900
Total output produced = 21420 = (7 % of 3400 with $90 signup)

Productivity = 21420 / (2400 + 1400 + 8900 )
Productivity = 1.68

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