New machinery to enhance its production process

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Reference no: EM133771929

Question

A bicycle manufacturing company recently invested in new machinery to enhance its production process. Prior to acquiring this machinery, the company had a workforce of 8 employees who, on average, produced 120 bicycles per hour. The workers were compensated at a rate of $15 per hour, while the machinery cost was $60 per hour. With the implementation of the new machinery, the company was able to reassign two workers to other departments. However, the cost of using the machinery increased by $20 per hour, while the production output increased by 8 bicycles per hour. Based on this data, answer the following questions. Calculate the labor productivity for both systems (that is, prior to and after acquiring machinery) using the measure of bicycles produced per worker. Calculate multifactor productivity for both systems, using the measure of bicycles produced per dollar of cost (combining labor and equipment costs). What is the percent changes in labor productivity (due to transition from old to new system).

Reference no: EM133771929

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