Question

Charles lackey operates a bakery in Idaho, Falls Because of its excellent product location, demand has increased by 35% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be backed at one time. this new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,800 loaves per month. Employees are paid $8.00 per hour. In addition to the labor cost, Charles has a constant utility cost per month of $800 and a per loaf ingredient cost of $0.40.
current multifactor productivity for 640 work hours per month=

Answer 1

Answer: 0.27 loaves per dollar

Explanation:

Given that,

Bakery currently makes(Output) = 1,800 loaves per month

Paid Employees = $8.00 per hour

Constant utility cost = $800 per month

Ingredient cost = $0.40 × 1,800

                         = $720

Wages = 640 work hours × $8.00 per hour

           = $5,120 per month

Total cost (Input) = Ingredient cost + Wages + Constant utility cost

                = $720 + $5,120 + $800

                = $6,640

Where,

O/P - Output

I/P - Input cost

current multi factor productivity = $\frac{O/p}{I/P\ cost}$

                                                     =  $\frac{1,800}{6,640}$

                                                     = 0.27 loaves per dollar