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If a company invests in production improvement option D that will boost labor productivity by 50%, while its annual depreciation costs will rise by an amount equal to 10% of the investment costs associated with installing option D, it is accurate to say that its labor costs per pair produced will decline

A. from $5.00 per pair to $2.50 for a production facility in Latin America that currently has labor productivity of 4,000 pairs per worker and total regular compensation (which does not include overtime pay) of $20,000 annually.
B. by 50% per pair at any production facility of any size capacity because the gains in labor productivity are 50% irrespective of what other differences in labor-related conditions may exist.
C. from $8.00 per pair to $6.40 for a production facility in Europe-Africa that currently has labor roductivity of 4,000 pairs per worker and total regular compensation (which does not include overtime pay) of $32,000 annually.
D. will be greatest at Asia-Pacific plants having comparatively low total annual compensation per employee as compared to North American plants having comparatively high levels of annual compensation per employee
E. from $8.00 per pair to $5.33 for a production facility in North America that currently has labor productivity of 5,000 pairs per worker and total regular compensation (which does not include overtime pay) of $40,000 annually

Answer :

Answer:

Option (E) is correct.

Explanation:

The labor productivity boost by 50%

From current 5000 pairs per worker,

the productivity will increase to:

= 5,000 × (1 + 50%)

= 7,500

Total pay = $40,000 annually

Cost per pair with increased productivity:

= Total pay ÷ Increased productivity

= 40,000 ÷ 7,500

= $5.33

Therefore, it is accurate to say that its labor costs per pair produced will decline from $8.00 per pair to $5.33 for a production facility in North America.

Answer:

Its Labor costs per pair produced will decline from $8.00 per pair to $5.33 for a production facility in North America that currently has labor productivity of 5,000 pairs per worker and total regular compensation (which does not include overtime pay) of $40,000 annually

Explanation:

Labor productivity boost[tex]=50\%[/tex]

Increase of Productivity [tex]=5000[/tex] × [tex](1+50\%)[/tex]

[tex]=5000*1.5[/tex]

[tex]=7,500[/tex]

Total Regular compensation(Annually) [tex]= $40,000[/tex]

Cost per pair with increased productivity:

= Total pay ÷ Increased productivity

= [tex]40,000[/tex] ÷ [tex]7,500[/tex]

= [tex]\$5.33[/tex]

Hence Option E is a correct answer.

Learn more about Labor productivity, refer:

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