Question

Munson Performance Auto, Inc., modifies 375 autos per year. The manager, Adam Munson, is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last year’s performance as a benchmark for future comparison. You have assembled the following data. Resource inputs were labor, 10,000 hours; 500 suspension and engine modification kits; and energy, 100,000 kilowatt-hours. Average labor cost last year was $20 per hour, kits cost $1,000 each, and energy costs were $3 per kilowatt-hour. What do you tell Mr. Munson?

Answer 1

The last year's performance taking into account that was mofied 375 autos and considering inputs as Labor, Kits and Energy was $2,667 per auto.

Step-by-step explanation:

1. To define a multifactor measure is necessary start by calculate the cost of different resources that was assembled, as follows:

1. Labor resource= 10,000 h

Labor cost per hour= $
`(20)/(h)`

Labor input =
`10,000h*(20)/(h)`=$200,000

2. Suspension and engine modification kits = 500

Cost of each Kit= $1,000

Kit's Input=
`500 kits*(1000)/(kit)` = $500,000

3. Energy resource= 100,000 kilowatt-hours = 100,000 kW-h

Cost of each kilowatt-hour= $
`(3)/(kW-h)`

Energy Input=
`100,000kW-h*(3)/(kW-h)`= $300,000

2. Now, for an overall performance you should sum differents Inputs;

Total Input=Labor Input + Kit's Input + Energy Input

Total Input= $200,000 + $500,000 + $300,000

Total Input = $1,000,000

3. Define how much money of the inputs ($1,000,000) corresponds to each of 375 autos:

Input per Auto = $
`(1,000,000)/(375)=`=$2,667

4. Answer:

The last year's performance taking into account that was mofied 375 autos and considering inputs as Labor, Kits and Energy was $2,667 per auto.