.A health club has 2 employees who work on lead generation. Each employee works
ID: 395613 • Letter: #
Question
.A health club has 2 employees who work on lead generation. Each employee works 40 hours a week, and is paid $21 an hour. Each employee identifies an average of 250 possible leads a week from a list of 8,000 names. Approximately 10 percent of the leads become members and pay a one-time fee of $120. Material costs are $185 per week, and overhead costs are $1,105 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input.
The multifactor productivity for this operation in fees generated per dollar of input = (round to 4 decimal places)
Explanation / Answer
Given values:
Number of employees = 2
Working hours = 40 hours per employee
Employee wage = $21 per hour
Total possible customers = 8000
Average leads per employee = 250 per week
Conversion rate = 10%
One time fee = $120
Material cost = $185 per week
Overhead cost = $1,105 per week
Solution:
Multifactor productivity is calculated as,
Multifactor productivity = Total fees generated / Total input expense
Total fees generated = (Number of employees x Possible leads x Conversation rate x One time fee)
Total fees generated = (2 x 250 x 10% x $120)
Total fees generated = $6000
Total input expense = (Employee cost + Material cost + Overhead cost)
Total input expense = [(2 x 40 hours x $21) + $185 + $1,105]
Total input expense = $2,970
Putting the calculated values in multifactor productivity formula, we get,
Multifactor productivity = Total fees generated / Total input expense
Multifactor productivity = $6000 / $2970
Multifactor productivity = 2.0202
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