Question

The weekly output of a production process is shown below, together with data for labor and material 3. inputs. The standard inventory value of the output is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus.5 times direct labor cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per nunning foot. What is the average multifactor productivity for this process? Material (t) Week Output 412 #Workers 6 2840 2550 2 364 3 392 2720 408 2790 onno

Answer 1

Weekly multifactor productivity is given using below formula

Output Inventory Value Multifactor Productivity Labor Cost Material Cost Overhead Cost

In this,

Labor Cost = Workers*Weekly Hours*Wages

Material Cost = Material*Material Cost

Overhead Cost = 0.5*Workers*Weekly Hours*Wages + 1500

For Week 1, we have multifactor productivity is

412 125 Productivity 1.444 6 40 16 2840 10 0.5 6 40 * 16 1500

For Week 2, we have multifactor productivity is

364 125 Productivity 1.431 5 40 16 2550 100.5 5* 40 * 16 1500

For Week 3, we have multifactor productivity is

392125 Productivity 1.463 5 40 16 2720 10 0.5 5* 40 * 16 1500

For Week 4, we have multifactor productivity is

408 125 Productivity 1.451 6 40 16 2790 10 0.5 6 40 * 16 1500

Hence average multifactor productivity = (1.444+1.431+1.463+1.451)/4 = 1.447