question about a) Calculate the multifactor productivity and labor productivity

timer Asked: Feb 16th, 2015

Question Description

Help me study for my Management class. I’m stuck and don’t understand.

1.  Woodland Furniture is a small manufacturer of kitchen chairs with 5 workers. The cost of labor is $15 per hour and workers work 40 hours in a week. The overhead cost is assumed to be 1.2 times the weekly total labor cost. Material cost is $10 per chair. Last year, on average, Woodland produced 250 chairs per week, and of the items produced 16% were defective. The non-defective chairs were sold for $100 each and the defective chairs were sold for an average of $40 per chair. Woodland recently installed a new assembly process, including a new sander and polisher. With this new system, production has increased to 280 chairs per week and the defective rate decreased to 10%. Assume the same sale prices for defective and non-defective chairs.

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