Question

. 1.16 An air-conditioner factory makes three different types of air-conditioners: the ceiling type, the cassette type and the wall mounted type. Weekly sales of each type are 2, 4 and 6 pieces, at a price of €350, €450, and €500 each, respectively. The ceiling type can be assembled in 1.5 hours, the cassette type in 1 hour and the wall-mounted type in 45 minutes. Labour cost is €40 per hour and the current factory's multi factor productivity is 2.2. a) Calculate the average cost per air-conditioner based on cur rent multifactor productivity b) Calculate labor productivity in euro per hour) for each type of air-condition c) Where the company should focus its efforts, based (i) on the labor productivity, and (ii) on average cost? ... 1.17 As part of a study for the Department of Labor Statistics, you are assigned the task of evaluating the improve ment in productivity of small businesses. Data for one of the small businesses you are to evaluate are shown at right. The data are the monthly average of last year and the monthly average this

Answer 1

a) Calculation of average cost per air conditioner based on current multifactor productivity:-

= Cost of the product / No. of units produced & sold

For Ceiling type air conditioner :

=1.5 hrs * $40 per hour/ 2

= $30

For cassette type:

=1 hr * $40 / 4

= $10

For wall mouted type:

=45 minutes / 60 minutes * $40

= $30

b) Calculation of labour productivity per hour:

production in 1 hr/ 60 mins * 40

ceiling type	1.5 hrs/60 mins *40	$ 1.0000
cassette type	1 hr /60 mins *40	$ 0.6667
wall mounted type	45 mins / 60 mins *40	$ 30.0000