Answer :
To calculate Multi-Factor Productivity (MFP), we need to divide the total output by the total input costs.
The formula for MFP is:
MFP = Output / (Labor Cost + Solvent Cost + Machine Rental Cost)
Given:
- Labor Cost: 520 hours at $13 per hour = $6,760
- Solvent Cost: 100 gallons at $5 per gallon = $500
- Machine Rental Cost: 20 days at $50 per day = $1,000
Total input cost = $6,760 + $500 + $1,000 = $8,260
The total output (cleaned items) is 650 items.
MFP = 650 / 8260 ≈ 0.0787 items per dollar