Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of the size of t
ID: 456829 • Letter: C
Question
Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,500 loaves per month. Employees are paid $8 per hour. In addition to the labor cost, Charles also has a constant utility cost per month of $750 a per loaf ingredient cost of $0.50. Current multifactor productivity for 640 work hours per month = After increasing the number of work hours to 864 per month, the multifactor productivity=
Explanation / Answer
CURRENT PRODUCTION=1500/MONTH WAGES=8/HR UTILITY COST=750/MONTH PER LOAF Raw material cost=0.5/loaf Multifactor productivity= dollar value of output/dollar value of input since price of loaves is not given hence I've taken output as the production value Multifactor productivity at 640 workhours per month 1500/(750+640*8+0.5*1500)= 0.227 multiplying the above factor with selling price of loaves will give the right multifactor productivity Multifactor productivity at 864 workhours per month since the labour hours have increases the new production will be=1500*864/640= 2025 hence Multifactor Productivity=2025/(750+864*8+0.5*2025)= 0.233 multiplyin the above factor wth selling price of loaves will give right multifactor productivity