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 $17 per hour per employee. Each employee identifies an average of 3,900 potential leads a week from a list of 4,800. An average of 8 percent of potential leads actually sign up for the service, paying a one-time fee of $90. Material costs are $1,300 per week, and overhead costs are $9,100 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input.

Answer 1

Answer: MFP= 4.00±0.01

Explanation:

Answer 2

Answer:

MFP = $6.77 per dollar of input

Explanation:

Multifactor productivity (MFP) compares total output produced by total inputs consumed. It is very useful when comparing productivity between companies that have different sales volumes and costs. In this case, for every $1 or input, the firm obtains $6.77.

MFP = (possible leads x number of workers x fee x conversion percentage) /  (labor costs + materials costs + overhead costs)

MFP = (3,900 leads x 3 workers x $90 x 8%) /  [(3 employees x 40 hours x $17) + $1,300 + $9,100]

MFP = $84,240 / $12,440 = 6.77