Question

A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,000 potential leads a week from a list of 5,000. An average of 4 percent of potential leads actually sign up for the service, paying a one-time fee of $70. Material costs are $1,000 per week, and overhead costs are $9,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input.

Answer 1

The multifactor productivity (MFP) for the operation is approximately 1.94 fees generated per dollar of input, which is calculated by dividing the total weekly fees generated from the service ($25,200) by the total weekly input costs ($13,000).

Step-by-step explanation:

To calculate the multifactor productivity (MFP) for this operation, we first need to determine the total output in terms of fees generated from the service and then divide it by the total input costs. The total output is obtained by multiplying the number of leads each employee identifies by the percentage of leads that sign up for the service and then by the fee per service. The input costs include labor, material, and overhead costs.

Step 1: Calculate the total weekly fees generated from the leads.
Average leads identified by each employee = 3,000
Total leads identified by three employees = 3,000 leads/employee × 3 employees = 9,000 leads
Percentage of leads that sign up = 4%
Therefore, actual customers = 9,000 leads × 4% = 360 customers
Fee per service = $70
Total weekly fees generated = 360 customers × $70/customer = $25,200

Step 2: Calculate the total weekly input costs.
Labor cost per employee = $25/hour × 40 hours
Total labor cost for three employees = $25/hour × 40 hours × 3 employees = $3,000
Material costs = $1,000
Overhead costs = $9,000
Total weekly input costs = $3,000 (labor) + $1,000 (materials) + $9,000 (overhead) = $13,000

Step 3: Calculate the MFP.
MFP = Total weekly fees generated / Total weekly input costs
MFP = $25,200 / $13,000
MFP ≈ 1.94

Therefore, the MFP for this operation is approximately 1.94 fees generated per dollar of input.

Answer 2

Ans. Multifactor productivity (per dollar of input) = 1.9385

Step-by-step explanation:

Hi, in order to find the multifactor productivity (per dollar of input) , we have to use the following equation.

`MP=(GeneratedFees)/(Labour+Materials+Overhead)`

So let´s find out the amount of each of the items in the equation.

Generated fees.

There are 3 employees and they find 3,000 potential leads every week, but only 4% actually sign up fo that $70 fee. That is:

3(employees)*3,000(leads)*0.04(ratio Effective leads)*$70(fee)=25,200

So the output or generated fees are 25,200.

Input.

Our inputs are: Labour+Materials and Overhead, materials are $1,000, Overhead is $9,000 and Labour is 3 emplyees, working 40 hours at $25 per hour per employee, that is: 3*40*24= $3,000.

Now, we have all we need to use the first equation.

`MP=(25,200)/(3,000+1,000+9,000)= 1,9385`

Best of luck