ANSWER KEY

3. The following data have been collected by the plant's production manager: Costs Last year This year Production (unit) 15,000 15,000 Labor (hours) $15/hr. 2,210 2,071 Material (pounds) $160 lbs. 200 180 Capital ($) 8% per year 1,000,000 1,250,000 Energy (BTU) $2.5 per BTU 20,000 20,390 (*) Capital assets cost to the firm 8% per year of the capital invested in them. Use Excel to answer the following questions: a. Compute the labor productivity for last year b. Compute the labor productivity for this year c. Compute the percentage change in labor productivity Compute the multi-factor productivity for last year e. Compute the multi-factor productivity for this year d. f. Compute the percentage change in multi-factor productivity g. The $250,000 increase in capital was an investment in a machine that saves on labor and materials. Was the investment worthwhile? 3.a 3.b 3.c 3.d 3.e 3.f 3.g 6.79 units/hour 7.24 units/hour 6.7% 0.0769 units/$ 0.0711 units/$ -7.4% No