1. Reynard Shoes employs 10 workers and $500,000 of equipment to produce 10,000 pairs of shoes annually. Assume that workers are paid $25 per hour and work a 50-hour work week, 50 weeks a year. a. Calculate the multifactor productivity for Reynard. b. Recalculate the multifactor productivity by including materials of $700,000 per year. c. How would you compare Reynard's productivity to Cincinnati Shoes, which produces 20,000 pairs of shoes per year with 15 workers, $200,000 of equipment, and $300,000 of materials a year? Assume a 40-hour work week, 50 weeks a year, and a wage rate of 27.50 per hour. What accounts for the difference?

2 Referring to Reynard Shoes from Exercise 1, the plant manager was asked to estimate the multifactor productivity for next year. The plant manager expects that the employment level will remain at 10 workers. She further estimates that equipment expenses will be $500,000 next year, but it is possible they will be as low as $425,000 or as high as $600,000. In consulting with the marketing department, the forecast is that demand will be 10,000 pairs of shoes next year but may be as low as 9000 or as high as 10,700. The wage rate will remain flat at $25 per hour, and the plant will operate a 50-hour work week, 50 weeks a year. Finally, the plant manager estimates that material costs will be $70 per pair of shoes but could be as low as $60 or as high as $85 per pair. Use this additional information to build a model to predict the multifactor productivity for next year.