1.Consider a division of Miller Chemicals that produces water purification cryst
ID: 443542 • Letter: 1
Question
1.Consider a division of Miller Chemicals that produces water purification crystals for swimming. The major inputs used in the production process are labor, raw materials, and energy. For year 1, the labor costs are $280,000; raw materials cost $30,000; and energy cost amount to $15,000. Labor costs for Year 2 are $320,000; raw materials cost $40,000; and energy costs amount to $9,000. Miller chemicals produced 100,000 pounds of crystal in Year 1 and 150,000 pounds of crystal in Year 2.
a)What is the multi-factor productivity for Miller Chemicals in Years 1 and 2?
b)What is the percentage change in productivity?
Explanation / Answer
(a)
Multifactor Productivity = Amount of crystal prodouced / (Labor cost + Raw material Cost + Energy Cost)
(b)
Change in productivity = (0.41 - 0.31) / 0.31
= 0.1 / 0.31
= 0.323
the percentage change in productivity = 32.3%
YEAR 1 Labor Cost 280000 Raw Material Cost 30000 Energy Cost 15000 Total 325000 No of Crystal Unit 100000 Mult Factor Productivity 0.31 YEAR 2 Labor Cost 320000 Raw Material Cost 40000 Energy Cost 9000 Total 369000 No of Crystal Unit 150000 Mult Factor Productivity 0.41Related Questions
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