Magnifi Co. produces a high-end amplifier for musical aficionados. Historically, only 80% of the 100 amplifiers produced per month have met the company's demanding standards for quality at final testing. Amplifiers that do not meet these standards are scrapped so that they do not have the potential to harm the company's elite reputation amongst audiophiles. Each monoblock amplifier is sold for $10,000. Each amplifier is painstakingly produced by craftsmen and requires 75 labor hours to produce. Each skilled employee works 160 hours per month and earns $25 per hour (including benefits). Materials cost $2,000 per amplifier and overhead is charged at 1.5 times labor cost.

Calculate the multifactor productivity ratio (unitless) and labor productivity (expressed as $/hour) for this product. Round and report your answers to 2 decimal places. Do not include units (e.g., $ for labor productivity).

Multifactor Productivity Ratio
Labor Productivity Ratio

After studying the manufacturing process, the Magnific Co.'s lead engineer has recommended three options to improve the company's multifactor productivity: 1) increase the sales price by 10 percent, 2) improve manufacturing quality so that only 10 percent of output has to be scrapped, and 3) reduce the total input costs by 10 percent. Which option would have the greatest impact on multifactor productivity? Round and report your answers to 2 decimal places, including the percentage change (e.g., 12.45). Use the rounded MFP values as the basis for your % change calculations. Do not include the % sign.

	MFP	% Change
Option 1
Option 2
Option 3

Best Option

(Type 1, 2, or 3)

Answer rating: 100% (QA)

To calculate the multifactor productivity ratio and labor productivity we first need to determine the total output and total input for the current man... View the full answer