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 $19 per hour per employee. Each employee identifies an average of 4,100 potential leads a week from a list of 5,000. An average of 5 percent of potential leads actually sign up for the service, paying a one-time fee of $70. Material costs are $1,400 per week, and overhead costs are $9,300 per week.

Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.)

Answer 1

3.32

Step-by-step explanation:

The computation of the multifactor productivity is shown below:

As we know that

Multifactor productivity = Output ÷ Input

where,

Output = (possible leads × no of workers × fee × Conversion percentage)

= 4100 × 3 × 70 × 5%

= $43050

And,

Input is

= Labor cost + Material cost + Overhead cost

where,

Labor cost = 3 × 40 × 19

= $2,280

Material cost = $1,400

And,

Overhead cost = $9,300

So,

Input = $2,280 + $1,400 + $9,300

= $12,980

Now

Multifactor productivity is

= $43,050 ÷ $12,980

= 3.32