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 $13 per hour per employee. Each employee identifies an average of 3,500 potential leads a week from a list of 4,900. An average of 8 percent of potential leads actually sign up for the service, paying a one-time fee of $90. Material costs are $1,500 per week, and overhead costs are $9,000 per week.Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.)

Multifactor productivity

Answer 1

6.27

Explanation:

The computation of Multifactor productivity is shown below:-

Multifactor productivity = (Potential leads × Number of workers × Fees × Conversion percentage) ÷ (Labor cost + Material cost + Overhead cost)

= (3,500 × 3 × $90 × 0.08) ÷ ((3 × 40 × $13) + $1,500 + $9,000)

= $75,600 ÷ $12,060

= 6.27

Therefore for computing the multifactor productivity we simply applied the above formula.