Question

Problem 2-7 The following table shows data on the average number of customers processed by several bank service units each day. The hourly wage rate is $15, the overhead rate is 1.2 times labor cost, and material cost is $4 per customer. Unit Employees Customers Processed / Day a. Compute the labor productivity and the multifactor productivity for each unit. Use an eight-hour day for multifactor productivity. (Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 3 decimal places.) Labor Productivity (customers per day per worker) Multifactor Productivity (customers per dollar input) Unit b. Suppose a new, more standardized procedure is to be introduced that will enable each employee to process one additional customer per day. Compute the expected labor and multifactor productivity rates for each unit (Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 3 decimal places.) Unit Labor Productivity customers per day per worker Multifactor Productivity customers per dollar input)

Answer 1

Given that hourly wage rate is 15$ per hour

The wage of an Employee  per day is 8*15= $120

Overhead cost is 1.2*labor cost = 1.2*120 = $144 Per Employee per day

Variable cost is $120+144$= $264 per employee per day

Material cost is $4 per customer  

Labor Productivity = Customer proceeds per day /Labor(Employee)

Multifactor productivity = Customer proceeds per day/{(variable cost*Employee) +(material cost*customers)}

a)

Unit	Employees	Customer proceeds per day	Labor productivity (Customer per day per worker)	Multifactor Productivity Customer per Doller input
A	5	40	40/5= 8	40/{(264*5)+(4*40)}= 0.027
B	8	45	45/8 =5.6	45/{(264*8)+(4*45)}= 0.019
C	6	55	55/6= 9.1	55/{(264*6)+(4*55)}= 0.030
D	3	32	32/3=10.6	32/{(264*3)+(4*32)} = 0.034

b)

Unit	Employees	Customer proceeds per day	Labor productivity (Customer per day per worker)	Multifactor Productivity Customer per Doller input
A	5	40+5= 45	45/5= 9	45/{(264*5)+(4*45)}= 0.03
B	8	45+8= 53	53/8 =6.6	53/{(264*8)+(4*53)}= 0.020
C	6	55+6= 61	61/6= 10.1	61/{(264*6)+(4*61)}= 0.033
D	3	32+3= 35	35/3=11.6	35/{(264*3)+(4*35)}= 0.037