Sample Productivity Problems

SAMPLE PRODUCTIVITY PROBLEMS
Problem No#1
Collins Little Company has a stuff of 4, each working 8 hours per day (for a payroll cost of $ 640/ day) and
overhead expenses of $ 400 / day. Collins processes and closes on 8 titles each day. The company
recently purchased a computerized title search system that will allow the processing of 14 titles per
day. Although the staff, their works hours, and pay will be same, the overheads expenses are now $ 800 per
day.
Solution:
Labor productivity with the old system:
= 8 titles per day/ 32 labor hours = 0.25 titles per hour
Labor productivity with the new system:
= 14 titles per day/ 32 labor hours = 0.44 title per labor hours
Multifactor productivity with the old system:
= 8 titles per day / (640 + 400) = 0.0077 titles per dollars
Multifactor productivity with the new system:
= 14 titles per day / (640 + 800) = 0.0097 titles per dollars
Problem No#2
At Modem Lumber, Inc., Art Binley, a president and a producer of an apple crates sold to growers,
has been able, with his current equipment, to produces240 crates per 100 logs. He currently purchases
100 logs per day, and each logs required 3 labor hours to process. He believes that he can hire a professional
buyer who can buy a better-quality log at the same cost. If this is the case, he increases his production to 260
crates per 100 logs. His labor hours will increase by 8hours per day. What will be the impact on productivity
(measured in crates per labor–hour) if the buyers is hired? What is the Growth in productivity in this case?
Solution:
(a) Current labor productivity = 240 crates /100 logs (3 hours pert log)
= 240/300
= 0.8 create per labor hour
(b) Labor productivity with buyer = 260 crates / (100 logs (3 hours per logs) +8 hours)
= 260 /308
= 0.844 crates per labor hours
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦−𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦

(c)Growth = 𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 (100)
= (0.844–0.8)/0.8 x100
=
Problem No#3
Student tuition at Boering University is $ 100 per semester credit hours. The states supplement school
revenue by matching student tuition, dollars per dollars. Average class size for typical three credit
course is 50 students. Labor costs are $4000 per class, material costs are $20 per student, and overhead
cost are $25,000 per class.
Find:
a) What is the multifactor productivity ratio?
b) If instructors work an average, what is the labor productivity ratio? (Keep in mind that professor
delivering the lecture work 14 hours per week the semester last for16 weeks)
Solution:
a) Value of Output = (50 student) x (3 credit hours) x ($ 100 tuition + $ 100 state support)
class student credit hours
= $ 30,000 per class
Value of Output = Labor + Materials + Overheads
= $4000 + ($20 per student x 50 students) + $25,000
Class
= $ 30,000 per class
Multifactor productivity = Output/ Input
$ 30,000 / 𝑐𝑙𝑎𝑠𝑠
=
$ 30,000/ 𝑐𝑙𝑎𝑠𝑠
= 1.00
b) Labor productivity is the ratio of the value of output to the labor hours. The value of output is the same as
in part (a), or $ 30,000 per class, so
14 hours x 16 weeks
Labor hours of input = weeks weeks
= 224hours per class
Labor productivity = Output/ Input

$ 30,000 per class
= 224 hours per class
= $ 133.93 per hours
Problem No#4
A company that processes fruits and vegetables is able to produce 400 cases of canned peaches in one
half hour with four workers. What is the labor productivity?
Solution:
Labor productivity = Quality Produced / Labors Hours
= 400 cases (4 workers x 1/2 hours / workers)
= 200 cases per labor hour
Problem No#5
A wrapping paper company produced 2,000 rolls of paper one day. Standard price is $1/roll. Labor cost
was $ 160, material cost was $ 50, and overhead was $ 320. Determine the multifactor productivity.
Solution:
Multifactor productivity = Quality produced at standard price/ (Labor cost + Material cost + Overhead)
= 2,000 rolls x $ 1/ ($160+ $ 50 + $320)
= 3.77 rolls output per dollars
Problem No#6
a) Find the productivity if four workers installed 720 square yards of carpeting in
eight hours.
b) Compute for the productivity of a machine which produced 68 usable pieces in two hours.
Solution:
a) Productivity = yards of carpeting install / Labors Hours worked

= 720 square yard / (4 workers x8 hours / worker)
= 720 yards / 32 Hours
= 22.5 yards/ hours
b) Productivity = Usable Pieces / Production Time

= 68 usable pieces / 2 hrs
= 34 pieces/ hours
Problem No#7
Determine the multifactor productivity for the combined input of the labor and the machine time
using the following:
Input:
Labor: $ 1,000
Materials: $ 520
Overheads: $ 2,000
Keep in mind the Production is 1760 unit
Solution:
Multifactor Productivity = Output / (Labor + Materials + Overheads)

= 1,760 Units / ($1,000 + $520+ $2,000)
= 0.50 units
Problem No#8
Calculate the productivity for the following operations:
a) Three employees processed 600 insurance policies last week. They 8 hours per day, 5
days per week.
b) A team of workers made 400 units of product, which is valued by its standard cost of $10
each (before markups for other expenses and profit). That accounting department
reported that for this job the actual cost were $ 400 per labor, $1000 for materials and
300 for overhead:
Solution:
Policies processed
a) Labor productivity =
𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒, ℎ𝑜𝑢𝑟𝑠
600 𝑝𝑜𝑙𝑖𝑐𝑖𝑒𝑠
=
3(40)
= 5 policies per hours
𝑄𝑢𝑎𝑙𝑖𝑡𝑦 𝑎𝑡 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑐𝑜𝑠𝑡

b) Multifactor productivity =
𝐿𝑎𝑏𝑜𝑟 + 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 + 𝑂𝑣𝑒𝑟ℎ𝑒𝑎𝑑
400 𝑢𝑛𝑖𝑡𝑠 ($10/𝑢𝑛𝑖𝑡𝑠)

=
$400 + $1000 + $300
$4000
=
$1700
= 2. 35
Problem No#9
Compute the multifactor productivity measure for an eight-hour day in which the usable output was 300
units, produced by three workers who used 600 pounds of materials. Workers have an hourly wage of $20,
and material cost is $1 per pound. Overhead is 1.5 times labor cost.
Solution:
Multifactor productivity = Usable output/ (Labor cos t+ Material cost + Overhead cost)
Labor cost = (3 workers) (8 hours) ($20/hour)

= $480
Material cost = (600 pounds) ($1/pound)
= $600
Overhead cost = (3 workers) (8 hours) ($20/hour) (1.5)
= $720
Usable output = 300 units
Multifactor productivity = 300 units/ ($480+ $600+$720)

= 0.167 units of output per dollar of input
Problem No#10
A health club has two employees who work on lead generation. Each employee works 40 hours a week and is
paid $20 an hour. Each employee identifies an average of 400 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 $100. Material costs are
$130 per week, and overhead costs are $1,000 per week. Calculate the multifactor productivity for this
operation in fees generated per dollar of input.
Solution:
(𝑷𝒐𝒔𝒔𝒊𝒃𝒍𝒆 𝒍𝒆𝒂𝒅𝒔) (𝑵𝒐.𝒐𝒇 𝒘𝒐𝒓𝒌𝒆𝒓𝒔 𝑭𝒆𝒆)(𝒇𝒆𝒆)(𝒄𝒐𝒏𝒗𝒆𝒓𝒔𝒊𝒐𝒏 𝒑𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆)

Multifactor productivity = (𝑳𝒂𝒃𝒐𝒓 𝒄𝒐𝒔𝒕+ 𝑴𝒂𝒕𝒆𝒓𝒊𝒂𝒍 𝒄𝒐𝒔𝒕 + 𝑶𝒗𝒆𝒓𝒉𝒆𝒂𝒅 𝒄𝒐𝒔𝒕)
(𝟒𝟎𝟎)(𝟐)($𝟏𝟎𝟎)(𝟎.𝟏)
= (𝟐𝒙𝟒𝟎𝒙$𝟐𝟎)+$𝟏𝟑𝟎+$𝟏𝟎𝟎𝟎
$8000
=
$2730
= 2.93

Sample Productivity Problems

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SAMPLE PRODUCTIVITY PROBLEMS

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦−𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦

Labor productivity = Output/ Input

a) Productivity = yards of carpeting install / Labors Hours worked

b) Productivity = Usable Pieces / Production Time

Multifactor Productivity = Output / (Labor + Materials + Overheads)

𝑄𝑢𝑎𝑙𝑖𝑡𝑦 𝑎𝑡 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑐𝑜𝑠𝑡

400 𝑢𝑛𝑖𝑡𝑠 ($10/𝑢𝑛𝑖𝑡𝑠)

Labor cost = (3 workers) (8 hours) ($20/hour)

Multifactor productivity = 300 units/ ($480+ $600+$720)

(𝑷𝒐𝒔𝒔𝒊𝒃𝒍𝒆 𝒍𝒆𝒂𝒅𝒔) (𝑵𝒐.𝒐𝒇 𝒘𝒐𝒓𝒌𝒆𝒓𝒔 𝑭𝒆𝒆)(𝒇𝒆𝒆)(𝒄𝒐𝒏𝒗𝒆𝒓𝒔𝒊𝒐𝒏 𝒑𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆)

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