Question

Mike's guitar fabrication shop produces low cost, highly durable guitars for beginners. Typically, out of the 100 guitarsthat begin production each month, only 80 percent are considered good enough to sell. The other 20 percent are scrapped due to quality problems that are identified after they have completed the production process. Each guitar sells for $260. Because some of the production process is automated, each guitar only requires 12 labor hours. Labor is paid at $9 per hour, materials cost is $40 per guitar, and overhead is $4,200.

The labor productivity for Mike's guitar fabrication shop is $_____________per hour.
The multifactor productivity ratio for Mike's guitar fabrication shop is_____________.
If Mike's guitar fabrication shop decides to improve quality so that only 15 percent are defective instead of 20 percent (while other things are held unchanged in the above description), the new ratio would be________.

please show work.

Answer 1