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.

Answer 1

Answer:

Ans. Multifactor productivity (per dollar of input) = 1.9385

Explanation:

Hi, in order to find the multifactor productivity (per dollar of input) , we have to use the following equation.

$MP=\frac{GeneratedFees}{Labour+Materials+Overhead}$

So let´s find out the amount of each of the items in the equation.

Generated fees.

There are 3 employees and they find 3,000 potential leads every week, but only 4% actually sign up fo that $70 fee. That is:

3(employees)*3,000(leads)*0.04(ratio Effective leads)*$70(fee)=25,200

So the output or  generated fees are 25,200.

Input.

Our inputs are: Labour+Materials and Overhead, materials are $1,000, Overhead is $9,000 and Labour is 3 emplyees, working 40 hours at $25 per hour per employee, that is: 3*40*24= $3,000.

Now, we have all we need to use the first equation.

$MP=\frac{25,200}{3,000+1,000+9,000}= 1,9385$

Best of luck