Question

Question 1: The following shows data on the average number of customers processed by several bank service units each day. The hourly wage rate is $10, overhead rate is 1.5 times labor cost, and material cost is $5 per customer. b) Suppose a new, more standardized procedure is to be introduced that will enable each employee to process two additional customer per day. Compute the expected labor and multifactor productivity rates for each unit.

Unit	Employees	Customers per day
A	4	32
B	5	45
C	4	36
D	7	49

a) Compute the labor productivity and the multifactor productivity for each unit. Use an eight-hour day for multifactor productivity

b) Suppose a new, more standardized procedure is to be introduced that will enable each employee to process two additional customer per day. Compute the expected labor and multifactor productivity rates for each unit.

Question 2: Compute the multifactor productivity measure for each of the days shown for production of chocolate bars in Table below. What do the figures suggest? Assume 8-hour day and an hourly rate of $15. Overhead cost is 1.75 times daily labor rate. Material cost is $4 per pound. Day Output Workers Materials (Pounds)

Day	Output	Workers	Material
1	4600	10	50
2	6600	7	80
3	8200	9	120
4	1200	4	55

Answer 1

1. TOAL WAGE = EMPLOYEE * $10 * 8 HOURS

TOTAL MATERIAL = CUSTOMERS * 5

OVERHEAD = 1.5 * LABOR COST

UNIT	TOTAL WAGE	MATERIAL	OVERHEAD	OUTPUT	PARTIAL	MULTIFACTOR
A	320	160	480	32	32 / 320 = 0.1	32 / (320 + 160 + 480 = 0.0333
B	400	225	600	45	45 / 400 = 0.1125	45 / (400 + 225 + 600 = 0.0367
C	320	180	480	36	36 / 320 = 0.1125	36 / (320 + 180 + 480 = 0.0367
D	560	245	840	49	49 / 560 = 0.0875	49 / (560 + 245 + 840 = 0.0298

AFTER THE CHANGE

UNIT	TOTAL WAGE	MATERIAL	OVERHEAD	OUTPUT	PARTIAL	MULTIFACTOR
A	320	200	480	40	40 / 320 = 0.125	40 / (320 + 200 + 480 = 0.04
B	400	275	600	55	55 / 400 = 0.1375	55 / (400 + 275 + 600 = 0.0431
C	320	220	480	44	44 / 320 = 0.1375	44 / (320 + 220 + 480 = 0.0431
D	560	315	840	63	63 / 560 = 0.1125	63 / (560 + 315 + 840 = 0.0367

2.

TOTAL WAGE = WORKERS * 8 HOURS * $15

OVERHEAD = 1.75 * LABOR COST

MATERIALS = PER POUND * $4

DAY	OUTPUT	TOTAL WAGE	MATERIAL	OVERHEAD	MULTIFACTOR
1	4600	1200	200	2100	4600 / (1200 + 200 + 2100) = 1.3143
2	6600	840	320	1470	6600 / (840 + 320 + 1470) = 2.5095
3	8200	1080	480	1890	8200 / (1080 + 480 + 1890) = 2.3768
4	1200	480	220	840	1200 / (480 + 220 + 840) = 0.7792

BASED ON THE MFP, WE CAN SAY THAT THE PRODUCTIVITY DEPENDS HIGHLY OVER MATERIAL COST AND LABOR COST SINCE LABOR HAS THE BIGGEST IMPLICATION OVER THE COST FACTOR, THE MOST OPTIMUM OPTION IS TO UTILIZE A MEDIUM WORKFORCE NUMBER WITH HIGHER MATERIAL BECAUSE OF THE HIGH OVERHEAD COST.

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