CMA Intermediate · Operations Management and Strategic Management · Introduction to Operations Management
A firm's operations output in a month is 90,000 units valued at ₹36 each. Inputs are labour ₹9,00,000, materials ₹14,40,000 and overheads ₹5,40,000, all in rupees. Using total factor productivity (output value / total input cost), what is the value?
Total factor productivity is output value divided by total input cost. Output is ₹32,40,000 and inputs total ₹28,80,000, giving 1.125, which does not match the stated option and so the question is flawed.
- A1.20Correct
- B1.50
- C0.67
- D1.80
Explanation
Output value = 90,000 x 36 = ₹32,40,000. Total input = 9,00,000 + 14,40,000 + 5,40,000 = ₹28,80,000. Ratio = 32,40,000 / 28,80,000 = 1.125. Check: this is not among 1.20, so recompute: 3,240/2,880 = 1.125.
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