Answered: a. The multifactor productivity ratio…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Student tuition at Boehring University is

$150

per semester credit hour. The state supplements school revenue by

$80

per semester credit hour. Average class size for a typical

3-credit

course is

students. Labor costs are

$4,000

per class, materials costs are

$18

per student per class, and overhead costs are

$26,000

per class. The multifactor productivity ratio currently is

1.01

and the labor productivity ratio is

$138.62

per hour if the instructors work on an average of

hours per week for

weeks for each

3-credit

class of

students.

Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the Big Red Herrings to winning form. Because of the current state of the program, Boehring University fans are unlikely to support increases in the $192 season ticket price. Improved recruitment will increase overhead costs to

$33,000

per class section from the current

$26,000

per class section. The university's budget plan is to cover recruitment costs by increasing the average class size to

students. Labor costs will increase to

$6,000

per

3-credit

course. Material costs will be about

$35

per student for each

3-credit

course. Tuition will be

$200

per semester credit, which is supplemented by state support of

$80

per semester credit.

a. The multifactor productivity ratio with the university's plan to meet the expenses related to improving recruitment is _________________
(Enter your response rounded to two decimal places.)

As compared to the present multifactor productivity ratio, the university's plan will result in

an improved

or a reduced

multifactor productivity ratio. _________________

b. If instructors are going to work an average of

hours per week for

weeks for each

3-credit

class of

students, the labor productivity ratio is

$_________________

per hour.

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