Question
In: Finance
A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment...
A company that makes shopping carts for supermarkets and other
stores recently purchased some new equipment that reduces the labor
content of the jobs needed to produce the shopping carts. Prior to
buying the new equipment, the company used 6 workers, who together
produced an average of 90 carts per hour. Workers receive $18 per
hour, and machine cost was $40 per hour. With the new equipment, it
was possible to transfer one of the workers to another department,
and equipment cost increased by $11 per hour while output increased
by 4 carts per hour.
a. Compute labor productivity under each system. Use carts
per worker per hour as the measure of labor productivity.
(Round your answers to 3 decimal places.)
| Before | carts per worker per hour | ||
| After | carts per worker per hour |
b. Compute the multifactor productivity under each
system. Use carts per dollar cost (labor plus equipment) as the
measure. (Round your answers to 3 decimal
places.)
| Before | carts/dollar cost | ||
| After | carts/dollar cost |
c. Comment on the changes in productivity
according to the two measures. Round your intermediate
calculations to 3 decimal places and final answers to 2 decimal
places.
| Labor productivity | (Click to select) increased decreased by % |
| Multifactor productivity | (Click to select) decreased increased by % |
Solutions
Expert Solution
Given,
Average carts produced = 90 carts per hour
worker's rate per hour = $ 18 per hour
Machine cost = $ 40 per hour
No. of workers = 6
Solution :-
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