What is the multi-factor productivity

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Reference no: EM131855078

Question: A company has introduced a process improvement that reduces processing time for each unit, so that output is increased by 25% with less material, but one additional worker required. Under the old process, five workers could produce 60 units per hour. Labor costs are $12/hour, and material input was previously $16/unit. For the new process, material is now $10/unit. Overhead is charged at 1.6 times direct labor cost. Finished units sell for $31 each.

(a) What is the multi-factor productivity BEFORE the process improvement

(b) What is the multi-factor productivity AFTER the process improvement

Reference no: EM131855078

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