Q.1 Set. (A)

ABC Post Office is evaluating the productivity of its mail processing centers. The

centers differ in the degree of automation, the type of work that can be performed, and

the skill of the workers.

[6 Marks]

Center

1 1000

2 2000

3

Pieces processed/hr No. of workers/hr

3000

10

5

2

Hourly wage rate Overhead rate/hr

$5.50 $10

$10 $

$12 50

aCalculate the multifactor productivity for each center.

b. Workers in Center 1 are scheduled to receive a 10% pay raise next month. How will

that affect productivity?

c. A new processing machine is available for Center 3 that would increase the output

to 5000 pieces an hour at an additional overhead rate of $30 an hour. Should Merrifield install the new processing machine?