Canada Post is evaluating the productivity of its mail processing centres. The centres differ in the degree of automation, the type of work that can be performed and the skill of the workers.

Centre	1	2	3
Piece Processed per hour	1,000	2,000	3,000
Number of Workers per hour	10	5	2
Hourly Wage Rate	$20.50	$25.00	$27.00
Overhead Rate per hour	$10.00	$25.00	$50.00

1. Calculate the multifactor productivity for each centre (3mks)

Centre	1	2	3
Piece Processed per hour	1,000	2,000	3,000
Number of Workers per hour	10	5	2
Hourly Wage Rate	$20.50	$25.00	$27.00
Overhead Rate per hour	$10.00	$25.00	$50.00
Cost of Labor	$205.00	$125.00	$54.00
OverheadCost	$10.00	$25.00	$50.00
Total Cost	$215.00	$150.00	$104.00
Multifactor productivity	1,000/ $215 = 4.65	2,000/ $150 =13.33	3,000/ $104 =28.84

1. Workers in Centre 1 are scheduled to receive a 10% pay raise next month. How will that affect productivity? Calculate and Explain(4mks)

Multifactor Productivity for Centre 1

1000 / (10* $20.50*1.1 + $10) =4.25

1. A new processing machine is available for Centre 3 that would increase the output to 5,000 pieces per hour at an additional overhead rate of $30.00 an hour. Should Canada Post install the new processing machine? Calculate and Explain your answer. (3mks)

5000 / (2*$27*+ $80) =37.31

Here productivity has increased from 28.84 to 37.31 piece per dollar. The productivity is still the highest and the new