Question

Compute the multifactor productivity measure for each of the weeks shown for production of chocolate bars. Assume 40-hour weeks and an hourly wage of $16. Overhead is 1.5 times weekly labor cost. Material cost is $9 per pound. (Round your answers to 2 decimal places.) Week Output (units) 26,000 31,000 29,000 33,000 Workers Material (1bs) 400 450 490 510 WeekMFP (output/ Total Cost)

Answer 1

There is a 40 hours week and hourly wage of $16.so weekly labor cost per worker = 40 x $16 = $640

Material cost = $9 per pound

Calculation of Multifactor productivity

Week 1:

Output = 26000 units

Labor cost = weekly labor cost per worker x number of workers = $640x7 = $4480

Overhead = 1.5 times weekly labor cost = $4480x1.5 = $6720

Material cost = $9 x 400 = $3600

Total cost = $4480+$6720+$3600 = $14800

Multifactor productivity = output / Total cost = 26000 units / $14800 = 1.76 units per dollar

Week 2:

Output = 31000 units

Labor cost = $640x8 = $5120

Overhead = $5120x1.5 = $7680

Material cost = $9x450 = $4050

Total cost = $5120+$7680+$4050 = $16850

Multifactor productivity = output / Total cost = 31000 units / $16850 = 1.84 units per dollar

Week 3:

Output = 29000

Labor cost = $640x8 = $5120

Overhead = $5120x1.5 = $7680

Material cost = $9x490 = $4410

Total cost = $5120+$7680+$4410 = $17210

Multifactor productivity = output / Total cost = 29000 units / $17210 = 1.69 units per dollar

Week 4:

Output = 33000 units

Labor cost = $640x7 = $4480

Overhead = $4480x1.5 = $6720

Material cost = $9x510 = $4590

Total cost = $4480+$6720+$4590 = $15790

Multifactor productivity = output / Total cost = 33000 units / $15790 = 2.09 units per dollar