homework - Productivity
TLW Consulting has been concerned about declining
profitability and the president has asked you to evaluate
productivity over the past two years. After several weeks, you
have managed to collect the following data about company
operations.
Billable Hours
Labor Hours
Travel
Information Technology
Management Overhead
Capital Investment
The average charge for billable hours is $300 and the average
cost per labor hour is $100. Invested capital is exclusive of
information technology investment. The productivity of an
individual factor involves comparing the cost of that input
factor to the value of the output, which is billable hours.
1. what is the output in hours?
2021: 120,000 hours 2022: 130,000 hours
2.a. What is the labor productivity for 2021 in dollars?
$2.40
2.b. What is the labor productivity for 2022 in dollars?
$2.44
2.c. what is the percent change in productivity?
1.56%
3.a. What is the total-factor productivity (use all the inputs) for
2021 based on the above factors?
$1.19
3.b. What is the multi-factor productivity for 2022?
$.94
3. c. What is the change in productivity from last year to this
year?
-21.98
2021
120,000
150,000
$4,000,000
$3,200,000
$5,000,000
$3,000,000
2022
130,000
160,000
$5,400,000
$8,500,000
$7,000,000
$4,500,000
Problem 4: How well is the company doing? What would you
recommend to the Boss? (Thinking question)
The main worry is the productivity which is down 21% since
the last year which is not good for company performance.
Problem 5:
Location
pieces processed
workers/hr
hourly wage rate
overhead/hour
Lawrence
Kansas City Milwaukee
7000
5600
6500
6
8
11
$19.50
$20.25
$19.50
$125.00
$120.00
$140.00
What is the multi-factor productivity for each of the centers per
hour (units/$)?
Lawrence: Expenses- $242, Productivity: 28.93
Kansas City: Expenses- $282, Productivity: 19.86
Milwaukee: Expenses- $354.50, Productivity: 18.35
Problem 6:
Based on the results of problem 5, which plant should the company shut down?
The company should shut down
The Milwaukee plant