eorge Kyparisis bals in his Miami plant With recent increase

eorge Kyparisis bals in his Miami plant. With recent increases in his costs, he has a newfound interest in efficiency, George is interested in the productivity of his organization. He would like to know if his organization is maintaining the manufacturing average of a 3 productivity. He as the following data representing a month from Last Year Now Cost Per Input Unit Units Produced Labor (hours) Resin (pounds) Capital Invested (5) Energy (BTU) 275 45 10 000 2.70 $12 per hour $6 per pounc 2%per month 300 50 9,000 2900 0.50 per BTU on a

Solution

Multifactor Productivity to be calculated for George Kyparisis making bowling balls in Miami plant :

Total cost for any year, $

= Cost / input unit x Labor hours + Cost/ input unit x Resin ( Pounds) + Cost / input unit x Capital invested + Cost / input unit x Energy (BTU)

= 12x Labour hours + 6 x Resin ( Pounds) + 2/100 x Capital invested+ 0.5 x Energy ( BTU )

Therefore,

Total cost for last year, $

= 12 x 300 + 6 x 50 + 0.02 x 9,000 +0.5 x 2900

= 3600 + 300 + 180 + 1450

= $5530

Total cost now , $

= 12 x 275 + 6 x 45 + 0.02 x 10000 + 0.5 x 2750

= 3300 + 270 + 200 + 1375

= $ 5145

Multifactor productivity for last year = Units produced/ Total cost = 1000/ 5530 = 0.18083

Multifactor productivity for this year = Units produced / Total cost = 1000/5145 = 0.19436

Percentage change in productivity

= ( Productivity this year – Productivity last year)/ Productivity last year x 100

= ( 0.19436 – 0.18083)/0.18083 X 100

= 0.01353 /0.18083 X 100

= 7.48 %

PERCENTAGE CHANGE IN PRODUCTIVITY = 7.48 %

PERCENTAGE CHANGE IN PRODUCTIVITY = 7.48 %