Mariah Enterprises makes a variety of consumer electronic products. Its camera m
ID: 406722 • Letter: M
Question
Mariah Enterprises makes a variety of consumer electronic products. Its camera manufacturing plant is considering choosing between two different processes, named Alpha and Beta, which can be used to make a component part. To make the correct decision, the managers would like to compare the labor and multifactor productivity of process Alpha with that of process Beta. The value of process output for Alpha and Beta is
$150150
per unit of product A and
$140140
per unit of product B, and the corresponding overhead costs for Alpha and Beta are
$5 comma 0005,000
and
$6 comma 0006,000,
respectively.
LOADING...
Process Alpha
Process Beta
Product
A
B
A
B
Output (units)
6060
7070
3030
4040
Labor ($)
$1 comma 2001,200
$1 comma 4001,400
$1 comma 0001,000
$2 comma 0002,000
Materials ($)
$3 comma 0003,000
$3 comma 5003,500
$1 comma 4001,400
$2 comma 5002,500
a. Which process, Alpha or Beta, is more productive?
Process
Alpha
has
nothing%
higher labor productivity. Process
Beta
has
nothing%
higher multifactor productivity. (Enter your responses rounded to the nearest wholenumber.)
Process Alpha
Process Beta
Product
A
B
A
B
Output (units)
6060
7070
3030
4040
Labor ($)
$1 comma 2001,200
$1 comma 4001,400
$1 comma 0001,000
$2 comma 0002,000
Materials ($)
$3 comma 0003,000
$3 comma 5003,500
$1 comma 4001,400
$2 comma 5002,500
Explanation / Answer
Process Alpha
Labor productivity = (50*170 + 30*150)/ (1200 + 1400) = 13000/2600 = 5
Multifactor productivity = (50*170 + 30*150)/ (1200 + 1400 + 1400 + 2500 + 8000) = 13000/14500 = 0.89
Process Beta
Labor productivity = (60*170 + 70*150)/ (1000 + 2400) = 20700/3000 = 6.9
Multifactor productivity = (50*170 + 30*150)/ (1000 + 2000 + 3500 + 1500 + 3000) = 13000/14500 = 1.88
From the above analysis, we see that Process Beta is more productive than Process Alpha, both in terms of labor productivity and multifactor productivity.