Question

QUESTION 18 Questions 15-18) The following table shows data on the average number of chocolate bars produced each week, together with data for labor and material Assume 40-hour weeks and an hourly wage of $15 Overhead is 1.5 times weekly labor cost Material cost is $10 per pound #Chocolate bars Produced / Weekl#Workers Material (lbs Week 1 Week 2 40,000 45,000 6 510 530 Compute the productivity growth from Week 1 to Week 2 using the multifactor productivities. Round the mutfactor productivity in each week to 3 decimal places before calculating productivity growth. -88% -6.3% О 63% 8.8%

Answer 1

For Week 1

Labor Cost = Number of workers * Number of weekly hours * wage per hour = 5*40*15 = $3000

Overhead cost = 1.5*weekly cost = 1.5*3000 = $4500

Material Cost = 510*10 = $5100

Total cost = Labor cost + Overhead cost + Material cost = 3000 + 4500 + 5100 = $12600

Chocolate bars produced = 40000

Multifactor Productivity = Number of chocolate bars/Total cost = 40000/12600 = 3.175

For Week 2

Labor Cost = Number of workers * Number of weekly hours * wage per hour = 6*40*15 = $3600

Overhead cost = 1.5*weekly cost = 1.5*3000 = $5400

Material Cost = 530*10 = $5300

Total cost = Labor cost + Overhead cost + Material cost = 3600 + 5400 + 5300 = $14300

Chocolate bars produced = 45000

Multifactor Productivity = Number of chocolate bars/Total cost = 45000/14300 = 3.147

%change = (3.147 - 3.175)/3.175*100% = -0.88 %