Question

Student tuition at ABC University is $250 per semester credit hour. The state supplements school revenue by matching student tuition dollar for dollar. In other words, for each dollar a student pays in tuition, the state pays a dollar that is also considered revenue. Average class size for a typical three-hour course is 30 students. Labor costs are $3,000 per class, materials costs the school $10 per student per class and overhead costs are $15,000 per class. For this problem, ABC University measures output as the total amount of revenue generated. a) What is the multifactor productivity performance for a course at ABC University?

Answer 1

Answer:

2.46

Explanation:

Given:

Student tuition at ABC University per semester credit hour = $250

Average class size = 30

Labor costs per class = $3,000

materials costs per student per class = $10

overhead costs per class = $15,000

a) Now,

The multifactor productivity ratio = $\frac{\textup{Output}}{\textup{Input}}$

also,

Input = Labor costs + Total materials costs + Total overhead costs

or

Input = $3,000 + ( $10 × 30 ) + $15,000 = $18,300

And,

Output

= Average class size × credit hour × ( Student tuition + state supplements )

= 30 × 3 × ( $250 + $250)

= $45,000

Therefore,

The multifactor productivity ratio = $\frac{\textup{45,000}}{\textup{18,300}}$

= 2.46