Question

A health club has 3 employees who work on lead generation. Each employee contacts leads 20 hours a week and is paid $24 per hour. Each employee contacts an average of 210 leads a week. Approximately 8% of the leads become members and pay a onetime fee of $100. Material costs are $180 per week, and overhead costs are $1,000 per week. a. Calculate the multifactor productivity for this operation in fees generated per dollar of input

Answer 1

0.64 fees generated per dollar of input

Step-by-step explanation:

Fees generated per week = Average number of leads * Leads % conversion to members * One time fee per lead

Fees generated per week = 210 * 8% * $100

Fees generated per week = $1,680

Overhead cost = $1,000 per week

Material cost = $180 per week

Labor cost = Number of employees * Hours per week * Wage per hour = 3 * 20 * $24 = $1,440

Multifactor productivity = Fees generated per week/(Overhead cost + Material cost + Labor cost)

Multifactor productivity = $1,680 / ($1,000 + $180 + $1,440)

Multifactor productivity = $1,680 / $2,620

Multifactor productivity = 0.6412214

Multifactor productivity = 0.64 fees generated per dollar of input