Question

The following table shows data on the average number of customers processed by several bank service units each day. The hourly wage rate is $15, the overhead rate is 1.2 times labor cost, and material cost is $4 per customer.

Unit	Employees	Customers Processed / Day
A	5	38
B	6	46
C	7	61
D	3	33

a. Compute the labor productivity and the multifactor productivity for each unit. Use an eight-hour day for multifactor productivity.(Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 3 decimal places.)

Unit	Labor Productivity (customers per day per worker)	Multifactor Productivity (customers per dollar input)
A
B
C
D

b. Suppose a new, more standardized procedure is to be introduced that will enable each employee to process one additional customer per day. Compute the expected labor and multifactor productivity rates for each unit. (Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 3 decimal places.)

Unit		Labor Productivity (customers per day per worker)		Multifactor Productivity (customers per dollar input)
A
B
C
D

Answer 1

Solution:

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Productivity is nothing but the measure that gives clear picture about the efficiency of production. Productivity is calculated by dividing output by input in a specific period.

Multi-factor productivity is nothing but the measure that gives clear picture about the overall efficiency based on the labor and capital inputs used in the production process.