Question

Joanna French is currently working a total of 12 hours per day to produce 240 dolls. She thinks that by changing the paint used for the facial features and fingernails that she can increase her rate to 360 dolls per day. Total material cost for each doll is approximately $3.50; she has to invest $20 in the necessary supplies (expendables) per day; energy costs are assumed to be only $4.00 per day; and she thinks she should be making $10 per hour for her time.

How would total (multifactor) productivity change (in %) if using the new paint raised Ms. French’s material costs by $0.50 per doll?

Answer 1

To calculate the change in multifactor productivity, divide the new total output by the initial total output and subtract 1. Then express the result as a percentage.

Step-by-step explanation:

Total multifactor productivity can be calculated by dividing the total output by the total inputs used. In this case, total input includes both labor and materials costs. To calculate the change in multifactor productivity, we can compare the initial total output to the new total output.

With the initial production of 240 dolls, the total input is 12 hours of labor per day multiplied by the cost of labor and 240 multiplied by the cost of materials. With the new production of 360 dolls, the total input is still 12 hours of labor per day, but now multiplied by the increased cost of labor, and 360 multiplied by the increased cost of materials. By calculating the ratio of the new total output to the initial total output, we can determine the change in multifactor productivity as a percentage.

For example, if the new total output is 400 dolls and the initial total output is 240 dolls, the change in multifactor productivity would be (400 / 240) - 1, which equals 0.6667 or 66.67%.