The Delta Company manufactures electrical assemblies. The current process uses 10 workers and produces 300 units per hour. You are considering changing the process with new assembly methods that increase output to 400 units per hour, but will require 14 workers (Table 5).

Workers are paid at a rate of 10 per hour, and overhead is charged at 140% (or 1.4 times) labour costs. Finished switches sell for 20 / unit.

1. Calculate the multifactor productivity for the current process;
2. Calculate the multifactor productivity for the new process.

Ad A.

Multifactor productivity of current process =

Ad B.

Multifactor productivity of new process =

+ Table 5. Output, labour and cost process data Current process New process Output units (units/hour) 300 400 Number of workers 10 14 Material cost per hour (/hour) 120 150