Question

A health club has 2 employees who work on lead generation. Each employee contacts leads 20 hours a week and is paid $20 per hour. Each employee contacts an average of 220 leads a week. Approximately 9% of the leads become members and pay a onetime fee of $100. Material costs are $150 per week, and overhead costs are $1,100 per week. a. Calculate the multifactor productivity for this operation in fees generated per dollar of input.

Answer 1

The multifactor productivity for this operation in fees generated per dollar of input is 1.95 fees per dollar of input.

Using this formula

Multifactor productivity=Units of Output/ Units of Labour+Units of Capital+ Units of Material

Where:

Units of output = (220*9%)×2

Units of output = 19.8 per employee×2

Units of output = 39.6 members

Units of output = 40 members (Approximately)

Units of output =40 *100

Units of output= $4,000

Units of labour = 2*$20×20

Units of labour= $800

Units of capital = $150+$1,100

Units of capital= $1,250

Let plug in the formula

Multifactor productivity = $4,000/$800+$1,250

Multifactor productivity = $4,000/$2,050

Multifactor productivity = 1.95 fees per dollar of input.

Inconclusion The multifactor productivity for this operation in fees generated per dollar of input is 1.95 fees per dollar of input.

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