Question 5

The ABC Company has a large order for special uniforms to be used in an urgent operation. Working the normal two shifts of 40 hours each per week, the ABC production process usually produces 2, 500 uniforms per week at a standard cost of $120 each. Seventy employers work the first shift and 30 the second. The contract price is $200 per uniform. Because of the urgent need, ABC is authorized to use around-the-clock production, six days per week. When each of the two shifts work 72 hours per week, production increases to 4,000 uniforms per week but at a cost of $144 each. a. Did the multifactor productivity ratio increase, decrease, or remain the same? If it changed, by what percentage did it change? b. Did the labor productivity ratio increase, decrease, or remain the same? If it changed, by what percentage did it change? c. Did weekly profits increase, decrease, or remain the same?