A company has introduced a process improvement that reducesprocessing time for each unit, so that output is increased by 25%with less material, but one additional worker required. Underold process, five workers could produce 60 units perhour. Labor costs are $12/hour, and material input waspreviously $16/unit. For the new process, material isnow$10/unit.
Overhead is charged at 1.6 times direct laborcost. Finished units are sold for $31 each. What increase(or decrease) in productivity is associated with the process improvement?
(a) Productivity with old system
(b) Productivity with new system
(c) % change (increase or decrease) in productivity