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Munson Performance? Auto, Inc
Munson Performance? Auto, Inc., modifies 300 autos per year. The? manager, Adam? Munson, is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last? year's performance as a benchmark for future comparison. You have assembled the following data. Resource inputs? were: labor,10000hours; 540 suspension and engine modification? kits; and? energy, ?100000 kilowatt-hours. Average labor cost last year was ?$25 per? hour, kits cost ?$1000 ?each, and energy costs were ?$5 per? kilowatt-hour.
The overall performance at Munson Performance? Auto, Inc.? =
nothing ?autos/dollar of input ?(round your response to six decimal? places).
Expert Solution
Computation of the overall performance:-
Total labor cost = Labor hours * Labor cost
= 10,000 hours * $25 per hour
= $250,000
Kits cost = Number of kits * Cost per kit
= 540 kits * $1,000 per kit
= $540,000
Energy cost = Energy used * Cost per kWh
= 100,000 kWh * $5 per kWh
= $500,000
Total cost = Total labor cost + Kits cost + Energy cost
= $250,000 + $540,000 + $500,000
= $1,290,000
Multifactor productivity = Output / Total cost
= 300 autos / $1,290,000
= 0.000233 autos per dollar of input
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