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Must show work
Solution
Implement the new process
Explanation:
Productivity = output/Input
Output = No of units per hour*price per unit
Labor cost = No of workers*rate per hour
Overhead cost = 1.4*labor cost
Current process:
Output = 200 units*20 = $4000
Input = Labor cost+ Material cost+ Overhead cost = (10*10)+120 + 1.4*(10*10) = 100 + 120 +
140 = 360
Productivity = 4000/360 = 11.11
New process:
Output = 300*20 = 6000
Input = Labor cost+ Material cost+ Overhead cost = (14*10)+150 + 1.4*(14*10) = 140 + 150 +
196 = 486
Productivity = 6000/486 = 12.35
Implement the new process as the productivity is high

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Must show workSolutionImplement the new processExplanation.pdf

  • 1. Must show work Solution Implement the new process Explanation: Productivity = output/Input Output = No of units per hour*price per unit Labor cost = No of workers*rate per hour Overhead cost = 1.4*labor cost Current process: Output = 200 units*20 = $4000 Input = Labor cost+ Material cost+ Overhead cost = (10*10)+120 + 1.4*(10*10) = 100 + 120 + 140 = 360 Productivity = 4000/360 = 11.11 New process: Output = 300*20 = 6000 Input = Labor cost+ Material cost+ Overhead cost = (14*10)+150 + 1.4*(14*10) = 140 + 150 + 196 = 486 Productivity = 6000/486 = 12.35 Implement the new process as the productivity is high