Question

Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% 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 baked 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 1,500 loaves per month. Employees are paid $8 per hour, in addition to the labor cost, Charles also has a constant utility cost per month of $600 and a per loaf ingredient cost of $0.35.
Current multifactor productivity for 640 work hours per month = _____ loaves/dollar.

Answer 1

Answer:

Current multi factor productivity for 640 work hours per month is 0.24 loaf/dollar

Explanation:

Employees are being paid $8 per hour,

Constant utility cost per month will remain same as $600

and loaf ingredient cost $0.35/loaf

Current multi factor productivity for 640 work hours per month is 0.24 loaf/dollar

640 hours  * $8/hour = $5,120

1500 loaves * $0.35 = $525

$5,120 + $525 + $600 = $6,245

= 1500 loaves / $6,245

=0.24 loaf/dollar