Mariah Enterprises makes a variety of consumer electronic pr

Mariah Enterprises makes a variety of consumer electronic products. Its camera manufacturing plant is considering choosing between two different processes, named Alpha and Beta, which can be used to make a component part. To make the correct decision, the managers would like to compare the labor and multifactor productivity of process Alpha with that of process Beta. The value of process output for Alpha and Beta is

$150150

per unit of product A and

$140140

per unit of product B, and the corresponding overhead costs for Alpha and Beta are

$5 comma 0005,000

and

$6 comma 0006,000,

respectively.

  

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Process Alpha

Process Beta

Product

A

B

A

B

Output (units)

6060

7070

3030

4040

Labor ($)

$1 comma 2001,200

$1 comma 4001,400

$1 comma 0001,000

$2 comma 0002,000

Materials ($)

$3 comma 0003,000

$3 comma 5003,500

$1 comma 4001,400

$2 comma 5002,500

a. Which process, Alpha or Beta, is more productive?

Process

Alpha

has

nothing%

higher labor productivity. Process

Beta

has

nothing%

higher multifactor productivity. (Enter your responses rounded to the nearest wholenumber.)

	Process Alpha	Process Beta
Product	A	B	A	B
Output (units)	6060	7070	3030	4040
Labor ($)	$1 comma 2001,200	$1 comma 4001,400	$1 comma 0001,000	$2 comma 0002,000
Materials ($)	$3 comma 0003,000	$3 comma 5003,500	$1 comma 4001,400	$2 comma 5002,500

Solution

Process Alpha

Labor productivity = (50*170 + 30*150)/ (1200 + 1400) = 13000/2600 = 5

Multifactor productivity = (50*170 + 30*150)/ (1200 + 1400 + 1400 + 2500 + 8000) = 13000/14500 = 0.89

Process Beta

Labor productivity = (60*170 + 70*150)/ (1000 + 2400) = 20700/3000 = 6.9

Multifactor productivity = (50*170 + 30*150)/ (1000 + 2000 + 3500 + 1500 + 3000) = 13000/14500 = 1.88

From the above analysis, we see that Process Beta is more productive than Process Alpha, both in terms of labor productivity and multifactor productivity.