Question

Student tuition at Boehring University is ​$180 per semester credit hour. The state supplements school revenue by ​$70 per semester credit hour. Average class size for a typical 3​-credit course is 45 students. Labor costs are ​$4 comma 400 per​ class, materials costs are ​$20 per student per​ class, and overhead costs are ​$26 comma 000 per class. The multifactor productivity ratio currently is 1.08 and the labor productivity ratio is ​$150.67 per hour if the instructors work on an average of 14 hours per week for 16 weeks for each 3​-credit class of 45 students. Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the Big Red Herrings to winning form. Because of the current state of the​ program, Boehring University fans are unlikely to support increases in the​ $192 season ticket price. Improved recruitment will increase overhead costs to ​$32 comma 000 per class section from the current ​$26 comma 000 per class section. The​ university's budget plan is to cover recruitment costs by increasing the average class size to 75 students. Labor costs will increase to ​$6 comma 700 per 3​-credit course. Material costs will be about ​$30 per student for each 3​-credit course. Tuition will be ​$250 per semester​ credit, which is supplemented by state support of ​$70 per semester credit.

a. The multifactor productivity ratio with the​ university's plan to meet the expenses related to improving recruitment is ?????. ​(Enter your response rounded to two decimal​ places.) As compared to the present multifactor productivity​ ratio, the​ university's plan will result in reduced/improved??? multifactor productivity ratio.

b. If instructors are going to work an average of 20 hours per week for 16 weeks for each 3​-credit class of 75 ​students, the labor productivity ratio is ​$?????? nothing per hour. ​(Enter your response rounded to two decimal​ places.)

Answer 1

Answer a:

Multifactor Procuctivity to meet the expenses related to improving the recruitment = [ No. of Students Per Cass x No. of Credit Hours x (Tution Rate + State Support Rate Per Credit Hour) ] / ( Labor + Material + Overhead)

= [ 75 x 3 x {250 + 70) ] / [ 6700 + (30 x 75) + 32000 ]

= 72000 / 40950

= 1.76 (Rounded to 2 decimal places)

Answer b:

The New Labor Productivity Ratio = Output / Labor

= 72000 / (20 x 16)

= 72000 / 320

= 225

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