Answer:
The productivity increase by 48.83%
Explanation:
old
60 units for 5 workers
5 x $12 = 60
material $16 x 60 = 960
overhead: 60 x 1.6 = 96
total revenue 60 x 31 = 1,860
total cosT: 60 + 960 + 96 = 1,116
productivity index_ 1,860 / 1,116 = 1,667
<em><u>now:</u></em>
output 60 + 25% = 75 units
6 workers x $12 = $72
materials $10 x 75 units = $750
overhead: $72 x 1.6 = $115.2
total revneue 75 units x $31 = 2,325
total cost: 75 + 750 + 115.2 = 940.2
productivity index_ 2,325 / 940.2 = 2,4728
percentage of improvement: ( it is calculate like a return on investment)
(2.4728 - 1.667) / 1.667 = 0.4883 = 48.83%
