To calculate the multifactor productivity of the car wash operation, we need to consider the output (number of cars washed) and the inputs (labor cost and material cost).
Given:
- Two employees are paid $7.50 per hour each.
- They can wash 12 cars per hour.
- The cost of water per car is $1, and the cost of soap and other cleaning supplies per car is $2.
Let's calculate the productivity ratio:
Total labor cost per hour = 2 employees * $7.50 per employee = $15.00
Total material cost per car = $1 (water) + $2 (soap and supplies) = $3.00
Total cost per hour = Total labor cost per hour + (Total material cost per car * Number of cars washed per hour)
Total cost per hour = $15.00 + ($3.00 * 12) = $15.00 + $36.00 = $51.00
Productivity = Output / Input
Output = Number of cars washed per hour = 12 cars
Input = Total cost per hour = $51.00
Multifactor Productivity = Output / Input
Multifactor Productivity = 12 cars / $51.00 = 0.235 cars per dollar
Therefore, the multifactor productivity of this car wash operation is 0.235 cars per dollar.
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