Table 1.2
The Abco Company manufactures electrical assemblies. The current process uses 10 workers and produces 200 units per hour. You are considering changing the process with new assembly methods that increase output to 300 units per hour, but will require 14 workers. Particulars are as follows:

Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor costs. Finished switches sell for $20 / unit.
-Use the information provided in Table 1.2. What is the multifactor productivity of the current process?
A) less than or equal to 8.0
B) greater than 8.0 but less than or equal to 10.0
C) greater than 10.0 but less than or equal to 12.0
D) greater than 12.0

Question

Table 1.2
The Abco Company manufactures electrical assemblies. The current process uses 10 workers and produces 200 units per hour. You are considering changing the process with new assembly methods that increase output to 300 units per hour, but will require 14 workers. Particulars are as follows:
  
Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor costs. Finished switches sell for $20 / unit.
-Use the information provided in Table 1.2. What is the multifactor productivity of the current process?
A) less than or equal to 8.0 
B) greater than 8.0 but less than or equal to 10.0 
C) greater than 10.0 but less than or equal to 12.0 
D) greater than 12.0

Quizplus · Accepted Answer

Multifactor productivity is calculated by dividing the value of output by the sum of the weighted inputs. In this case, the value of output is 120, and the sum of the weighted inputs is 10. Therefore, the multifactor productivity is 120 / 10 = 12.

Table 1.2 The Abco Company Manufactures Electrical Assemblies. the Current Process Uses