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 $4,000 per hour per employee. Each employee identifies an average of 4,000 potential leads a week from a list of 4,900 An average of 9 percent of potential leads actually sign up for the service, paying a one-time fee of $80. Material costs are $1,200 per week, and overhead costs are $9,200 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

Number of Leads actually sign up for service = 9 percent of 4000 for each employee x 3 employees

= 360 x 3 = 1080 leads

Total fee generated by 1080 leads signed up for service per week = $80 / lead x 1080 leads = $86,400

Cost calculations for each week :

a) Total payment to 3 employees

= $4000 per hour per employee x x 40 hours each employee x 3 employees

= $480,000

b) Material cost = $1200

c) Overhead cost = $9200

Thus, Total cost = $480,000 + $1200 + $9200 = $490400

Thus, Multifactor productivity

= Total fees generated/ Total cost

= $86400 / $490400

= 0.176 ( 0.18 rounded to 2 decimal places )

MULTIFACTOR PRODUCTIVITY = 0.18

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