Question: A company implemented a process improvement and as a result output is increased by 20% with less material but it requires two additional workers. Under
A company implemented a process improvement and as a result output is increased by 20% with less material but it requires two additional workers. Under the old process, six workers could produce 50 units per hour. Labor costs are $25/hour. Material input was previously $18/unit and is $15/unit for the new process. Overhead is estimated to be 1.8 times direct labor cost. Finished products sell for $40 each. Calculate the increase in productivity associated with the process improvement.
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