Question

Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 35% in the last year On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand The bakery currently makes 1,500 loaves per month. Employees are paid $8 per hour. In addition to the labor cost, Charles also has a constant utility cost per month of $750 and a per loaf ingredient cost of $0.50. Current multifactor productivity for 640 work hours per month = 0.226 loaves/dollar (round your response to three decimal places) After increasing the number of work hours to 864 per month, the multifactor productivity = loaves/dollar (round your response to three decimal places).

Answer 1

Current multifactor productivity for 640 work house per month. ? Output 1500 loaves per month Labour cost = 640 x $8 per hour utility cost = 750 Ingredients cost = 150000 $50 and the multifactor productivity is 21500/6620 - (640x8 - 5120+ 750+(1500X0-50-150) - 0 2265 Hew multifactor productivity is Labour cost 864888 hours permonth - 1500/8412 - (86488 = 6912, 750, (1500r0.50 0.1783 2