Answer:
first we must calculate the original value of the goods produced = $240 x 2,600 = $624,000
original cost = $125 x 2,600 = $325,000
original amount of labor used = (72 + 32) x 40 = 4,160 hours
value of goods after change = 3,800 x $240 = $912,000
cost after change = 3,800 x $152 = $577,600
labor used after change = (72 + 32) x 72 = 7,488 hours
a) original multifactor productivity = $624,000 / $325,000 = $1.92 per dollar spent
multifactor productivity after change = $912,000 / $577,600 = $1.58 per dollar spent
multifactor productivity decreased by 17.71%
b) original labor productivity = $624,000 / 4,160 hours = $150 per labor hour
labor productivity after change = $912,000 / 7,488 hours = $121.79 per labor hour
labor productivity decreased by 18.81%
c) change in weekly profits = ($912,000 - $577,600) - ($624,000 - $325,000 = $35,400 increase
