Med-Tech Labs Case Med-Tech labs is a facility that provides medical tests and e
ID: 398278 • Letter: M
Question
Med-Tech Labs Case Med-Tech labs is a facility that provides medical tests and evaluations for patients, ranging from analyzing blood samples to performing magnetic resonance imaging (MRI). Average cost to patients is $60 per patient. Labor costs average $15 per patient, materials costs are $20 per patient, and overhead costs are averaged at $20 per patient. (1) What is the multifactor productivity ratio for Med-Tech? (2) What does the multifactor productivity ratio results tell you? (3) If the average lab orker spends three hours for each patient, what is the labor productivity ratio?Explanation / Answer
Solution:
(1) Multifactor productivity ratio is calculated as,
Multifactor productivity = Average cost to patients / (Labor costs + Materials costs + Overhead costs)
Multifactor productivity = $60 / ($15 + $20 + $20)
Multifactor productivity = $60 / $55
Multifactor productivity = 1.09
(2) The multifactor productivity ratio of 1.09 shows that the Med-tech labs charges its patients 9% more than its total labor, materials and overhead costs.
(3) Labor productivity ratio is calculated as,
Labor productivity = Average cost to patients / Average Labor hours
Labor productivity = $60 / 3 hours
Labor productivity = $20 per hour