Student tuition at Boehring University is $180 per semester credit hour. The sta
ID: 398293 • Letter: S
Question
Student tuition at Boehring University is $180 per semester credit hour. The state supplements school revenue by $100 per semester credit hour. Average class size for a typical 3-credit course is 45 students. Labor costs are $4,400 per class, materials costs are $22 per student per class, and overhead costs are $26,000 per class. The multifactor productivity ratio currently is 1.20 and the labor productivity ratio is $168.75 per hour if the instructors work on an average of 14 hours per week for 16 weeks for each 3-credit class of 45 students. Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting wil return the Big Red Herrings to winning form. Because of the current state of the program, Boehring University fans are unlikely to support increases in the $192 season ticket price. Improved recruitment will increase overhead costs to $33,000 per class section from the current $26,000 per class section. The university's budget plan is to cover recruitment costs by increasing the average class size to 85 students. Labor costs will increase to $6,500 per 3-credit course. Material costs will be about $35 per student for each 3-credit course. Tuition will be $250 per semester credit, which is supplemented by state support of $100 per semester credit.Explanation / Answer
a) Value of Output = ( 85 student )x (3 credit hours) x ($ 250 tuition + $ 100 state support) class student credit hours =
85x3x350=$ 89,250 per class
Value of Input = Labor + Materials + Overheads = $ 6500 + ($35 per student x 85 students) + $33,000 Class = $ 42,475 per class
Multifactor productivity = Output/ Input = $ 89,250 / class $ 42,475/ class = 2.10
b) Labor productivity is the ratio of the value of output to the labor hours.
The value of output is the same as in part (a), or $ 89,250 per class, so
Labor hours of input = 20 hours x 16 week = 320 hours per class
Labor productivity = Output/ Input = $ 89,250 per class 320 hours per class = $ 278.90 per hours