A company has introduced a process improvement that reducesprocessing time for each unit, so that output is increased by 25%with less material, but one additional worker required. Underold process, five workers could produce 60 units perhour. Labor costs are $12/hour, and material input waspreviously $16/unit. For the new process, material isnow$10/unit. Overhead is charged at 1.6 times direct laborcost. Finished units are sold for $31 each. What increase(or decrease) in productivity is associated with the process improvement?(a) Productivity with old system(b) Productivity with new system(c) % change (increase or decrease) in productivity

Question

A company has introduced a process improvement that reducesprocessing time for each unit, so that output is increased by 25%with less material, but one additional worker required. Underold process, five workers could produce 60 units perhour. Labor costs are $12/hour, and material input waspreviously $16/unit. For the new process, material isnow$10/unit. Overhead is charged at 1.6 times direct laborcost. Finished units are sold for $31 each. What increase(or decrease) in productivity is associated with the process improvement?(a)   Productivity with old system(b)  Productivity with new system(c)   % change (increase or decrease) in productivity

Winston Cooper · Accepted Answer

a) 744 profitb)1072.8 profitc)increace 44%

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