Use dollars values as Outputs and Inputs for all productivity ratios.

One automaker offers several car models, and models X and Y are in the best-selling list. In December, the automaker produced 1100 cars of model X at a unit selling price of $120000. The automaker has 120 direct labor employees whose compensation (including wages and fringe benefits) amounts to $100 per hour per employee. During December, model X cars were produced on 8 working days (of 8 hours each), and other models were produced on other days.

a. Determine the labor productivity of model X in December. [3Marks]

b. The automaker produces model Y at a unit selling price of $150000. During December, 900 model Y cars were produced on 7 working days (of 8 hours each). On one day, one employee called in sick. Determine the labor productivity of model Y in December. [3 Marks]

c. Here is additional information about the automaker. The direct material cost of model X is $22000 per unit; the direct material cost of model Y is $29000 per unit. The annual overhead expense incurred in operating the whole production plant is $60,000 per working day.

i. Determine the multi-factor productivity of the automaker in December. [6 Marks]

ii. What is the interpretation of the multi-factor productivity? [2 marks] iii. In January, the automaker produced 1,000 model Y cars in 8 working days (without any employee sick leave). What was productivity growth (the percentage change) in labor productivity of model Y from December to January?