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(Solved): In the existing production system a company produces 50 units per hour employing five workers. Labor ...



In the existing production system a company produces 50 units per hour employing five workers. Labor costs are $16/hour, and material input is $20/unit. Overhead is charged at 1.3 times the total labor cost. Now the company has introduced a process improvement that reduces processing time for each unit, so that output is increased by 25% with less material cost per unit, but one additional worker required. For the new process, material is now $16/unit. Labor cost rate and over head calculation rule remains the same. What is the multifactor productivity for this company in their new system when they sell their finished product units $26 each?



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