Question: A company has introduced a process improvement that reduces processing time for each unit, so that output is increased by 50% with less material, but one additional worker required. Under the old process, 7 workers could produce 60 units per hour. Labor costs are $12/hour, and material input was previously $20/unit. For the new process, material is now $ 14/unit. Overhead is charged at 1.8 times direct labor cost. Finished units sell for $37 each.
Answer each of the following questions:
1. Before the Process Improvement, the Multifactor Productivity?
2. After the Process Improvement, the Multifactor Productivity?
3. The increase in productivity associated with the process improvement?