The output of a process is valued at $100 per unit. The cost of labor is $50 per hour. The accounting department provided the following information about the process for the past two weeks:

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter4: Linear Programming Models
Section4.8: Data Envelopment Analysis (dea)
Problem 42P
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The output of a process is valued at $100 per unit. The cost of labor is $50 per hour. The
accounting department provided the following information about the process for the past
two weeks:
Week 1
Week 2
Units Produced
1,124
981
Labor (hours)
255
191
Material ($)
21,041
18,364
Overhead ($)
8.992
7,848
a) Use the multifactor productivity ratio to see whether recent process improvements
had any effect and, if so, how much was the effect.
b) Has labor productivity changed? Use the labor productivity ratio to support your
answer.
Transcribed Image Text:The output of a process is valued at $100 per unit. The cost of labor is $50 per hour. The accounting department provided the following information about the process for the past two weeks: Week 1 Week 2 Units Produced 1,124 981 Labor (hours) 255 191 Material ($) 21,041 18,364 Overhead ($) 8.992 7,848 a) Use the multifactor productivity ratio to see whether recent process improvements had any effect and, if so, how much was the effect. b) Has labor productivity changed? Use the labor productivity ratio to support your answer.
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