Question

A company has improved its production process. Under the old process, 16 workers could produce 4,892 units per hours and the materials cost $53 per unit of output. Workers are paid $15 per hour and the finished product is sold for $112 per unit. After the improvement, materials costs have been reduced by $13 per unit of output and it now takes 2 fewer workers to make the same amount of output. What is the percentage change in multifactor productivity? (do not use a % sign, e.g. enter 50% as .5)

Answer 1

32.5%

Step-by-step explanation:

multi-factor productivity = total output / (labor + materials + overhead costs)

old multi-factor productivity = $547,904 / ($240 + $259,276 + $0) = 2.111

new multi-factor productivity = $547,904 / ($210 + $195,680 + $0) = 2.797

the percentage change in multi-factor productivity = [(2.797 - 2.111) / 2.111] x 100 = 32.5%