Question

Student tuition at Boehring University is $160 per semester credit hour. The state supplements school revenue by $70 per semester credit hour. Average class size for a typical 3-credit course is 50 students. Labor costs are $4,200 per class, materials costs are $22 per student per class, and overhead costs are $27,000 per class. The multifactor productivity ratio currently is 1.07 and the labor productivity ratio is $154.02 per hour if the instructors work on an average of 14 hours per week for 16 weeks for each 3-credit class of 50 students. Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the Big Red Herrings to winning form. Because of the current state of the program, Boehring University fans are unlikely to support increases in the $192 season ticket price. Improved recruitment will increase overhead costs to $30,000 per class section from the current $27,000 per class section. The university's budget plan is to cover recruitment costs by increasing the average class size to 80 students. Labor costs will increase to $6,700 per 3-credit course. Material costs will be about $30 per student for each 3-credit course. Tuition will be $225 per semester credit, which is supplemented by state support of $70 per semester credit. a. The multifactor productivity ratio with the university's plan to meet the expenses related to improving recruitment is 1.63. (Enter your response rounded to two decimal places.) As compared to the present multifactor productivity ratio, the university's plan will result in an improved multifactor productivity ratio. b. If instructors are going to work an average of 20 hours per week for 16 weeks for each 3-credit class of 80 students, the labor productivity ratio is $ per hour. (Enter your response rounded to two decimal places.)

Answer 1

(b) - $172.50

Given data:

Tuition per semester credit hour = $160

State support = $70

Class size = 80 students

Number of credits = 3

Labor productivity ratio:

Lecturer hours = 20 hours a week * 16 weeks = 320 hours

Total output = Total output = (Tuition per Credit + State Support) * Credits per Course * Students per Course = (160 + 70) * 3 * 80 = $55,200

Labor productivity = Total output / Working hours = 55200/320 = $172.50 per hour