Productivity: In last steakhouse Americus, a pizza under delivering food store 1
ID: 436926 • Letter: P
Question
Productivity: In last steakhouse Americus, a pizza under delivering food store 1,000 "works: pizza with price of $18 each. There were six employees working full time in last month, on a regular 8-hour per day schedule. Hourly wage rate in $5 per person. Materials used for the making each pizza(including allocated overhead expenditures) cost of $5.5. In this month as the business grows and to satisfy the demand increase. Steakhouse American hired one more part time period to work for 4 hours per day, with hourly wage rate of $ 1.5. Full time employees are paid with the same wage rate as in the last month. In total 1,200 pizzas have been sold in this month, with same price as that in the last month. Materials cost for making each pizza increased to be $6 due to higher overheads. Ignoring other expenditures, assume the steakhouse opens 26 days per month. Please use appropriate measure to compare the productivities last month and this one) Hint: Calculate the productivities of both month, and calculate the growth rate.).Explanation / Answer
(a) Previous month
Fixed Cost = no.of employees * Wage per employee
wages paid to an employ in 1 month = No. of day * Hours worked per day * wage per hr.
wages per employee = 26 * 8 * 10 = $ 2080
Fixed cost = 6 * 2080 = $ 12480
variable cost = no. of units sold * materials cost of each unit = 1000 * 5.5 = $ 5500
Total cost = fixed cost + variable cost = 12480 + 5500 = 17980
Total revenue = No. of units sold * value of each unit = 1000*18 = 18000
Productivity = Revenue / production cost = 18000/17980 = 1.0011
(b) present month
Fixed cost = previous month fixed cost + cost due to extra employee
Cost due extra employee = 26 * 15 *4 = $ 1560
Fixed cost = 12480 +1560 = $ 14040
variable cost = no. of units sold * materials cost of each unit = 1200 * 6 = $ 7200
Total cost = fixed cost + variable cost = 14040 + 7200 = $ 21240
Total revenue = No. of units sold * value of each unit = 1200 * 18 = $ 21600
Productivity = Total revenue/Total production cost = 21600/21240 = 1.017
Growth rate of productivity = (1.017 - 1.0011)/1.011*100 = 1.57 %
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