Mariah Enterprises makes a variety of consumer electronic products. Its camera m
ID: 416794 • 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 $200 per unit of product A and $130 per unit of product B and the corresponding overhead costs for Alpha and Beta are $8,000 and $4,000, respectively. Process Al aProcess Beta Product Output (units) Labor (S) 70 40 60 $1,200 $1,400 $1,000 $2,000 30 S) $3,500 $1.500 $2.500 $1,400 a. Which process, Alpha or Beta, is more productive? Process has %higher labor productivity. Process has %higher multi actor productivity. Enter your esponses roundedto he nearest whole num berExplanation / Answer
Labor productivity of process Alpha = Total value of output A and B / Total labor cost of A and B
= (70*200+40*130)/(1200+1400)
= 7.385
Labor productivity of process Beta = Total value of output A and B / Total labor cost of A and B
= (60*200+30*130)/(1000+2000)
= 5.3
Multifactor productivity of process Alpha = Total value of output A and B / Total cost (labor + materials + overhead) of A and B
= (70*200+40*130)/(1200+1400+3500+1500+8000)
= 1.2308
Multifactor productivity of process Beta = Total value of output A and B / Total cost (labor + materials + overhead) of A and B
= (60*200+30*130)/(1000+2000+2500+1400+4000)
= 1.4587
Labor productivity of Alpha is higher than Beta = (7.385-5.3)/5.3 = 39.34 % higher than that of Beta
Multifactor productivity of Beta is higher than Alpha = (1.4587-1.2308)/1.2308 = 18.51 % higher than that of Alpha
Process Alpha has 39.34 % higher labor productivity
Process Beta has 18.51 % higher multifactor productivity