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16 July, 09:18

George Kyparisis makes bowling balls in his Miami plant. With recent increases in his costs, he has a newfound interest in efficiency. George is interested in determining the productivity of his organization. He would like to know if his organization is maintaining the manufacturing average of a 3% increase in productivity. He has the following data representing a month from last year and an equivalent month this year: Last Year Now Cost Per Input UnitUnits Produced 1,000 1,000 Labor (hours) 280 255 $12Resin (pounds) 48 43 $5Capital Invested ($) 9,000 10,000 1%Energy (BTU) 2,900 2,750 $0.50The percent change in productivity for one month last year versus one month this year on a multifactor basis with dollars as the common denominator = ___%?

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  1. 16 July, 09:40
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    7.313%

    Explanation:

    In the problem above, the total cost for last year production is equivalent to the addition of labor cost, energy cost, capital cost, and material cost. Thus,

    Total cost (last year) = (300*12) + (3000*0.6) + (9000*0.02) + (48*6) = 3600 + 1800 + 180 + 288 = 5868.

    Last year productivity = unit produced/total cost = 1000/5868 = 0.17042

    Total cost (this year) = (275*12) + (2850*0.60) + (10000*0.02) + (43*6) = 3300 + 1710 + 200 + 258 = 5468

    This year productivity = 1000/5468 = 0.18288

    %change in productivity = [ (0.18288 - 0.17042) / 0.17042]*100% = 7.313%
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