Problem 2-9 A company offers ID theft protection using leads obtained from clien

Question

Problem 2-9 A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,200 potential leads a week from a list of 4,800. An average of 6 percent of potential leads actually sign up for the service, paying a one-time fee of $50. Material costs are $1,100 per week, and overhead costs are $10,000 per week Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.) Multifactor productivity

Explanation / Answer

Material costs per week = $1100

Overhead costs per week = $10000

Number of employees = 3

Number of hours each employee works per week = 40

Hourly pay rate for each employee = $25

The total input cost per week = Total salary of employees + Material costs per week + Overhead costs per week

= 3 * 40 * 25 + 1100 + 10000

= $14100

Possible leads per employee = 3200

Conversion percentage of potential employees = 6%

One time fee per sign up of service = $50

The total output of revenue per week = Possible leads per employee * No. of employees * Conversion percentage * One time sign up fee

= 3200 * 3 * 0.06 * 50

= $28800

Multifactor productivity = (The total output of revenue per week / The total input cost per week)

= 28800 / 14100

= 2.04

The multifactor productivity is 2.04

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