Reference no: EM132382960

Student tuition at ABC University is $250 per semester credit hour. The state supplements school revenue by matching student tuition dollar for dollar. In other words, for each dollar a student pays in tuition, the state pays a dollar that is also considered revenue. Average class size for a typical three-hour course is 30 students. Labor costs are $3,000 per class, materials costs the school $10 per student per class and overhead costs are $15,000 per class. For this problem, ABC University measures output as the total amount of revenue generated.

a) What is the multifactor productivity performance for a course at ABC University?

b) If instructors work an average of 10 hours per week for 16 weeks for each three-credit hour class of 30 students, what is the labor-hours productivity ratio?

c) Suppose next year, the tuition increases to $300 per semester credit hour but the state only pays $80 per semester hour instead of the matching it had previously paid. The instructors will work on average 9 hours per week for 16 weeks for each three credit hours class of 30 students. What is the labor-hours productivity ratio here and what is the percent change from b)?