Question

Collins Little Company has a staff of 4 employees, each working 8 hours per day at a rate of $20/hour. Their overhead expenses are $200/day. Collins processes and closes on 12 titles each day. They are considering purchasing a computerized title search system that will allow the processing of 20 titles per day. With the new system, they could cut their staff to 2 employees working the same hours at the same pay, but their overhead expenses would double to $400 per day.

a. Compute the labor productivity with the old system (in titles / hour).
b. Compute the labor productivity with the new system (in titles / hour).
c. Compute the multifactor productivity with the old system (in titles / dollar).
d. Compute the multifactor productivity with the new system (in titles / dollar).

Answer 1

Answer:

A. Labor productivity = 12 titles /(4*8)

                                   = 12 /32

                                    0.375 hrs per unit

b. labor productivity = 20 / 16

                                  = 1.25 hrs per unit

c. multi-factor productivity = output/ input

                                            = 12 /( 640 +200)

                                            = 0.0143

d. multi-factor productivity =  output/ input

                                            = 20/ (320+400)

                                            = 0.2778

Explanation:

labour =640 = 4*8*20

labour = 320 = 2*8*20