Question 1 Based on the following data, calculate the single-factor productivity ratio using hours of labor for a housekeeping department.
• Number of employees = 100
• Average hourly rate = $5.50
• Total hours worked in September = 15,570
• Total square feet maintained = 190,000
Productivity = Output / Input Here, Output = total square feet maintained = 190,000 And, Input = total hours worked = 15,570 So, productivity will be 190,000 / 15,570 = 12.2 square feet maintained per hour ———————————————- One could have also used the input using the $ unit. In that case, the input will be Input = total hours worked x per hour rate = 15,570 x $5.50 = $85,635 Productivity = Output / Input = 190,000 / 85,635 = 2.22 square feet maintained per $
Question 3. Assume that a new piece of equipment could allow 25% of the labor force in Question 1 to be eliminated. Using a 173-hour working month for each employee, a total equipment cost of $60,000 (which has a useful life of 3 years), and ignoring the effect of cash flow and time value of money, would this be a good use of capital?
I am having a hard time understanding how the book came up with these answers. need it worked out so I understand the process
Yes, this would be a good use of capital. The total annual cost would be $20,000 ($60,000 ÷ 3) and total annual savings would be $285,450 ($23,787.50 per month × 12 months). Therefore, the total monthly benefit is $22,120.83.