A company offers ID theft protection using leads obtained fr

A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $20 per hour per employee. Each employee identifies an average of 3,600 potential leads a week from a list of 4,600. An average of 6 percent of potential leads actually sign up for the service, paying a one-time fee of $75. Material costs are $1,300 per week, and overhead costs are $10,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input.

Solution

MFP = (Potential Leads) (No. of workers)(Fee)(Conversion percentage) / Labor cost + Material cost + Overhead cost

MFP = (3,600)(3)($75)(0.06) / (3 x 40 x $20) + 1,300 + 10,000

MFP = $48,600 / $13,700

MFP = 3.55