Considering the number of pieces processed per hour as its output, Merrifield Post Office is evaluating the productivity of its mail processing centers

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Considering the number of pieces processed per hour as its output, Merrifield Post Office is evaluating the productivity of its mail processing centers. The centers differ in the degree of automation, the type of work that can be performed, and the skill of the workers.

Center	1	2	3
Pieces processed per hour	1,000	2,000	3,000
Number of workers per hour	10	5	2
Hourly wage rate	$5.50	$10.00	$12.00
Overhead rate per hour	$10.00	$25.00	$50.00

a) Calculate the multifactor productivity for each center.

b) Workers in Center 2 are scheduled to receive a 10% pay raise next month. What will be the change in the multifactor productivity rate? Also, what is the percentage change in the multifactor productivity performance?

c) A new processing machine is available for Center 1 that will increase the output to 1,600 pieces an hour although this will increase the overhead rate by $30.00 per hour. Merrifield will only install the new processing machine if it increases the multifactor productivity of Center 1 by at least 10%. Should Merrifield install the new processing machine? Justify your answer. Also, what is the percentage change in the multifactor productivity performance?