A company has introduced a process change that reduces processing time for each unit, so that output is increased by 20%, but one additional worker is required. Under the old process, four workers could produce 50 units per hour. Labor costs were $60/ hour, and material input was previously $12 per unit. For the new process, the material is now $8/ unit. Overhead is charged at 1.8 times the direct labor cost. Finished products are sold at the same unit price. Is there a gain in the multifactor productivity due to this process change? If yes, by how much percentage?

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Yes there is a gain in multifactor productivity due to this process change To calculate the multifac... View the full answer