Bookmark Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its

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Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 55% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The backery currently makes 1,800 loaves per month. Employees are paid $8 per hour. In addition to labor costs, Chares also has a constant utility cost per month $550 and a per loaf ingredient cost of $0.35.

Current multifactor productivity for 640 work hours per month = loaves/dollar (round your response to three decimal places).

After increasing the number of work hours to 992 per month,the multifactor productivity = how many loaves/dollar (round your response to three decimal places)

The percentage increase in productivity = % what percentage

Explanation / Answer

Multifactor productivity = Outputs/(Labor cost + Utility cost + Ingredients cost)

            Output = 1800 loaves

Labor cost = 640 hours x $8

            Utility cost = $550

            Ingredients cost = 1800 x $0.35

            Thus, multifactor productivity = 1800/6300 = 0.286

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