High School

1. A company produces 1,213 units of output per hour using 37 workers and 530 pounds of raw materials. Each worker is paid $15 per hour. Materials cost $9 per pound. Overhead is charged at 1.5 times the labor expense. Finished units sell for $104 each.

What is the productivity of materials? (#/#)

2. A company produces 1,123 units of output per hour using 33 workers and 570 pounds of raw materials. Each worker is paid $17 per hour. Materials cost $6 per pound. Overhead is charged at 1.5 times the labor expense. Finished units sell for $137 each.

What is the productivity of materials? ($/$)

3. A company produces 1,137 units of output per hour using 34 workers and 510 pounds of raw materials. Each worker is paid $18 per hour. Materials cost $6 per pound. Overhead is charged at 1.6 times the labor expense. Finished units sell for $129 each.

What is the productivity of overhead? ($/$)

Answer :

1) The productivity of materials is approximately 2.29 units per pound, 2)the productivity of materials is approximately 1.97 units per pound and 3)the productivity of overhead is approximately $0.13 of revenue per dollar of overhead expense.

1) To calculate the efficiency of materials, we divide the number of units created by the sum of raw materials utilized:

Productivity of materials = Units produced / Pounds of raw materials

In this case, the company produces 1,213 units of output per hour using 530 pounds of raw materials:

Productivity of materials = 1,213 / 530 ≈ 2.29

Therefore, the productivity of materials is approximately 2.29 units per pound.

2) Using the same formula as above, we can calculate the productivity of materials:

Productivity of materials = Units produced / Pounds of raw materials

In this case, the company produces 1,123 units of output per hour using 570 pounds of raw materials:

Productivity of materials = 1,123 / 570 ≈ 1.97

Therefore, the productivity of materials is approximately 1.97 units per pound.

3) To calculate the productivity of overhead, we divide the revenue generated by the overhead expense:

Productivity of overhead = Revenue / Overhead expense

In this case, the company sells finished units for $129 each and the overhead is charged at 1.6 times the labor expense. The labor cost is calculated by duplicating the number of workers by their hourly wage:

Labor expense = Number of workers * Hourly wage

Labor expense = 34 * $18 = $612

Overhead expense = 1.6 * Labor expense

Overhead expense = 1.6 * $612 = $979.20

Productivity of overhead = Revenue / Overhead expense

Productivity of overhead = $129 / $979.20 ≈ 0.13 ($/$)

Therefore, the productivity of overhead is approximately $0.13 of revenue per dollar of overhead expense.

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