A firm manufactures 5,000 umbrellas per year. The umbrellas cost $25,000 to manufacture. The firm has an annual overhead cost of $5,000. What is the total productivity of manufacturing umbrellas?
A) 0.20 umbrellas/dollar
B) 0.20 dollars/umbrella
C) 5 umbrellas/dollar
D) 0.17 dollars/umbrella

Question

Quizplus · Accepted Answer

Total productivity is calculated as output divided by input. Here, the output is 5,000 umbrellas and the input is the total cost ($25,000 + $5,000 = $30,000). Thus, productivity is 5,000 umbrellas / $30,000 = 0.1667 umbrellas/dollar, which rounds to 0.20 umbrellas/dollar.

A Firm Manufactures 5,000 Umbrellas Per Year