Question

"A company offers ID theft protection using leads obtained from client banks. Four employees work 40 hour a week on the lead, at a pay rate of $35 per hour per employee. Each employee identifies an average of 3500 potential leads a week from a list of 6000. An average of 3 percent actually sign up for the service, paying a one-time fee of $60. Material costs are $1500 per week, and overhead costs are $8000 per week. What is the multi-factor productivity for this operation in fees generated per dollar of input (rounded to 2 decimals)?"

Answer 1

1.67

Explanation:

The computation of multi-factor productivity is shown below:-

Multi-factor productivity = Potential leads × Number of workers × Fee × Conversion percentage ÷ Labor cost + Material cost + Overhead cost

= 3,500 × 4 × $60 × 0.03 ÷ 4 × 40 × $35 + $1,500 + $8,000

= 25,200 ÷ 15,100

= 1.67

Therefore for computing the multi-factor productivity we simply applied the above formula.