Question

A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,000 potential leads a week from a list of 5,000. An average of 4 percent of potential leads actually sign up for the service, paying a one-time fee of $70. Material costs are $1,000 per week, and overhead costs are $9,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.) Multifactor productivity

Answer 1

Answer:

1.938/lead

Explanation:

To calculate multifactor productivity we need to divide total output by total input. To find total output and total input we need to go through some minor workings as shown below.

DATA

Number of employees = 3

Total hours worked = 40

Hourly rate = 25/hr

Material cost = 1000/week

Overhead cost = 9000/week

$multifactor productivity = \frac{Out put}{In put}$

$multifactor productivity = \frac{25,200}{13,000}$

$multifactor productivity = 1.938/lead$

INPUT

Total Inputs = labor cost + Material cost + Overhead cost

Total inputs = 3000 + 1000 + 9000

Total inputs = $13,000

working

Total labor cost = No. of labor x no. of hours worked x hourly rate

Total labor cost = 3 x 40 x 25

Total labor cost = $3000

OUTPUT

Total output = No. of  leads x subscription fee

Total output = 360 x 70

Total Output = $25,200

working

Average potential lead = 3000

Total potential lead =3 x 3000 = 9000

Actual signup lead = 4% of 9000 = 360

Subscription fee per lead = 70