The weekly output of a fabrication process is shown below, together with data for labor and material inputs. Standard selling price is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per foot. What is the average multifactor productivity?
A) 1.463
B) 1.457
C) 1.431

Question

The weekly output of a fabrication process is shown below, together with data for labor and material inputs. Standard selling price is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per foot. What is the average multifactor productivity? 
A) 1.463 
B) 1.457 
C) 1.431

Quizplus · Accepted Answer

To calculate the average multifactor productivity, we need to divide the output by the total input, which includes labor and material.

Output for the week = 300 units
Labor input = 40 hours per unit x $16 per hour x 300 units = $192,000
Material input = $10 per foot x 10,000 feet (total for the week) = $100,000

Total input = $192,000 + $100,000 = $292,000

Overhead cost = $1,500 + 0.5 x $192,000 = $97,500

Total cost = $292,000 + $97,500 = $389,500

Average multifactor productivity = Output / Total input = 300 / $292,000 = 1.457

Therefore, the best choice is B.

The Weekly Output of a Fabrication Process Is Shown Below