Answered Essay: Vanessa's Bakery wants to understand how to measure productivity, starting with the

Vanessa’s Bakery wants to understand how to measure productivity, starting with the production of brownies. The bakers work for 40 hours per week, and are paid $12 per hour. Accountants have assessed overhead to be 1.5 times labor cost (on a weekly basis). The cost of materials for brownies is $7 per pound. Help Vanessa to analyze her business by calculating multifactor productivity for these four weeks. (Round your answers to 2 decimal places.)

Week Output (units) Workers Material (lbs)
1 29,000 4 490
2 33,000 8 460
3 30,000 8 510
4 35,000 10 570

Week MFP (Output / Total Cost)

1

2

3

4

Expert Answer

Answer

Multifactor productivity = Output/(Labour cost + Overhead cost + Material cost)

= Output/(Number of labours*Number of weekly hours*Labour rate + Labour cost*1.5 + Material*cost of material)

Week 1 = 29000/(4*40*12 + 1.5*(4*40*12) + 490*7) = 3.52 units per dollar

Week 2 = 33000/(8*40*12 + 1.5*(8*40*12) + 460*7) = 2.57 units per dollar

Week 3 = 30000/(8*40*12 + 1.5*(8*40*12) + 510*7) = 2.28 units per dollar

Week 4 = 35000/(10*40*12 + 1.5*(10*40*12) + 570*7) = 2.19 units per dollar

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