Concept explainers
A
Interpretation: the total percentage by which the costs should be reduced in order to increase the Multifactor Productivity by 10%, when only material cost is reduced is to be identified.
Concept Introduction: The multifactor productivity ratio contains the productivity of a collection of inputs involved in the production progression. This helps to identify how resourcefully an organization exploits its operational resources.
B
Interpretation: the total percentage by which the costs should be reduced in order to increase the Multifactor Productivity by 10%, when only labor cost is reduced is to be identified.
Concept Introduction: The multifactor productivity ratio comprises of the productivity of a group of inputs involved in production. This aids in identifying how resourcefully an organization exploits its operational resources.
C
Interpretation: the total percentage by which the costs should be reduced in order to increase the Multifactor Productivity by 10%, when only overhead cost is reduced is to be identified.
Concept Introduction:The multifactor productivity ratio includes the productivity of a collection of inputs elaborated in production. This benefits in identifying how resourcefully an organization exploits its operational resources.
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Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)
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- A car company modifies 375 cars per year. The manager is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last year's performance as a benchmark for future comparison. You have assembled the following data. Resource inputs were labour, 10,000 hours; 500 kilowatt-hours of energy. Average labour cost last year was €20 per hour, kits cost €1,000 each and energy costs were €3 per kilowatt-hour. What do you tell the manager?arrow_forwardA cleaning company cleans 100 houses per month and uses S10 of chemicals, S35 of labor, and $5 of misc. expenses for each house it cleans. After some quality complaints, the company has decided to increase its use of chemicals to S40. By what percentage has multifactor productivity decreased? 0% O 16,67% O 37.5% O 50%arrow_forwardWhite Tiger Electronics produces CD players using an automated assembly line process. The standard cost of CD players is $150 per unit (labor, $30; materials, $70; and overhead, $50). The sales price is $300 per unit.a. To achieve a 10 percent multifactor productivity improvement by reducing materials costs only, by what percentage must these costs be reduced? b. To achieve a 10 percent multifactor productivity improvement by reducing labor costs only, by what percentage must these costs be reduced? c. To achieve a 10 percent multifactor productivity improvement by reducing overhead costs only, by what percentage must these costs be reduced?arrow_forward
- Cooling Fan Manufacturing started in year 2015. They spend $200,000 total cost to make the shipment including Labor, Materials, Capital Cost and other expenses. They sold the merchandise for $300,000. After 5 years, in year 2020 the expenses double up to $400,000 and the sales also gone up to $1,000,000. Compute the Productivity of Cooling Fan Manufacturing in year 2015 and year 2020. Compare the two scores and Explain what are the possible reason behind.arrow_forwardYour company is preparing an estimate of its production costs for the coming period. The controller estimates that direct materials costs are$45 per unit and that direct labor costs are$21 per hour. Estimating overhead, which is applied on the basis of direct labor costs, is difficult. The controller's office estimated overhead costs at $3,600 for fixed costs and $18 per unit for variable costs. Your colleague, Lance, who graduated from a rival school, has already done the analysis and reports the "correct" cost equation as follows: Overhead cost = $10,600 + $16.05 per unit Lance also reports that the correlation coefficient for the regression is .82 and says, "With 82 percent of the variation in overhead explained by the equation, it certainly should be adopted as the best basistot estimating costs." When asked for the data used to generate the regression, Lance produces the following: Month Overhead Unit Production $57,144 60,756 77,040 3,048 3,248 4,176 3 4. 56,412 81,396 72,252…arrow_forwardAn electronics company makes communications devices for military contracts. The company just completed two contracts. The navy contract was for 3,140 devices and took 32 workers two weeks (40 hours per week) to complete. The army contract was for 7,040 devices that were produced by 42 workers in three weeks (40 hours per week). a. Calculate the productivity for navy and army contracts in units produced per labor hour. (Round your answers to 2 decimal places.) Contract Productivity Navy Army b. On which contract were the workers more productive? O Navy contract O Army contractarrow_forward
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