QUESTION 3 (20 Marks)

Use the information provided below to answer the following questions.

INFORMATION:

A health club has three employees who work on lead generation. Each employee works 40 hours a week, and is paid R100 an hour. Each employee identifies an average of 300 possible leads a week from a list of 10 000 identified names. Approximately 30 percent of the leads become members and pay a onetime fee of R200. Material costs are R2 000 per week, and overhead costs are R16 000 per week.

REQUIRED:

3.1. Calculate the multifactor productivity for this operation in terms of fees generated per Rand of input. (8 marks)

3.2. The management of the health club is considering the services of a trainer to improve the productivity of the employees. It is anticipated that an average of 500 possible leads per week will be identified by each employee after the training. The total cost of the onetime training is estimated at R3 000 per employee. Calculate the new multifactor productivity associated with this operation in fees generated per Rand of input. (8 marks)

3.3. Will the expected growth in multifactor productivity after the training exceed the 10% increase expected by the management of the club? (4 marks)