Question

Charles lackey operates a bakery in Idaho, Falls Because of its excellent product location, demand has increased by 35% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be backed at one time. this new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,800 loaves per month. Employees are paid $8.00 per hour. In addition to the labor cost, Charles has a constant utility cost per month of $800 and a per loaf ingredient cost of $0.40.current multifactor productivity for 640 work hours per month=

Answer 1

Answer: 0.27 loaves per dollar

Explanation:

Output = 1,800 loaves per month

Employees are paid = $8.00 per hour

Constant utility cost per month = $800

Per loaf ingredient cost = $0.40

Ingredient cost = $0.40 × 1800

                         = $720

Wages for 640 work hours per month = $8 × 640

                                                               = $5120

Total cost = utility cost per month + Wages for 640 hours + Ingredient cost

                 = $800 + $5120 + $720

                 = $6,640

current multi-factor productivity for 640 work hours per month:

$= \frac{O/p}{I/p(cost)}$

$= \frac{1,800}{6,640)}$

      = 0.27 loaves per dollar

Where,

O/p - output

I/p - Input