Answer :
Final answer:
Multi-Factor Productivity is a measure of how efficiently multiple inputs are utilized in producing output. The output in this case is 650 cleaned items, divided by the total cost of labor, solvent, and machine rental gives MFP of 0.0787 items per dollar.
Explanation:
In the context of business, Multi-Factor Productivity (MFP) is a measure of how efficiently multiple inputs are utilized in the production of goods or services. In this scenario, we are given the number of items cleaned and the associated costs for labor, solvent, and machine rental.
To calculate MFP, you divide the units of output by the sum of the units of inputs. Here, the output is 650 dry cleaned items. The inputs include labor cost (520 hours x $13/hour = $6760), solvent cost (100 gallons x $5/gallon = $500), and machine rental cost (20 days x $50/day = $1000). So, the total cost of inputs is $8,260 ($6760 + $500 + $1000).
The MFP is therefore 650 items / $8,260 = 0.0787 items per dollar.
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Final answer:
Multi-Factor Productivity can be calculated by dividing the total output (650 dry cleaned items) by the total cost of resources ($8260). The result, 0.079 items per dollar, denotes that each dollar spent in this process results in about 0.079 items being cleaned.
Explanation:
The Multi-Factor Productivity refers to the amount of output produced with respect to multiple inputs used in the process. To calculate this, first, identify the total cost of resources consumed. The labor cost is 520 hours * $13/hour = $6760, solvent cost is 100 gallons * $5/gallon = $500, and machine rental cost is 20 days * $50/day = $1000. So, total cost is $6760 + $500 + $1000 = $8260.
Then divide the total output (650 dry cleaned items) by the total cost. So, the Multi-Factor Productivity = 650 items / $8260 = approximately 0.079 items per dollar. This means, on average, each dollar spent on labor, solvent, and machine rental results in about 0.079 items being cleaned.
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