Question

George Kyparisis makes bowling balls in his Miami plant. With recent increases in his​ costs, he has a newfound interest in efficiency. George is interested in determining the productivity of his organization. He would like to know if his organization is maintaining the manufacturing average of a​ 3% increase in productivity. He has the following data representing a month from last year and an equivalent month this​ year:

   Last Year   Now   Cost Per Input Unit
Units Produced    1,000   1,000  
Labor (hours)   300   275   $12
Resin (pounds)   50   45   $6
Capital Invested ($)   10,000   11,000   2%
Energy (BTU)   3,000   2,850   $0.60

The percent change in productivity for one month last year versus one month this year on a multifactor basis with dollars as the common denominator​ =

​(enter your response as a percentage rounded to two decimal​ places).

Answer 1

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Last year productivty:

Production = 1000 units
Labor hr at $12 per hour = 300*12 = $3600
Resin at $6 = 50*6 = $30
Capital Cost per month at 2% = 10000*2% = $200
Energy at 0.60 = 3000 * 0.60 = $1800

Total produtivity = 3600+30+200+1800 = 5630

Last year productivty:

Production = 1000 units
Labor hr at $12 per hour = 275*12 = $3300
Resin at $6 = 45*6 = $270
Capital Cost per month at 2% = 11000*2% = $220
Energy at 0.60 = 2850 * 0.60 = $1710

Total produtivity = 3300+270+220+1710 = 5500

Change = [(1000/5630)-(1000/5500)]/(1000/5630) = -0.0236

Hence improvement greater than 2.36% is required