Answer:
- see below for the table values
- US labor cost: $115275 per year
Step-by-step explanation:
The labor charge is for (6 days/week). In Mongolia, the charge per laborer is then ...
(6 days/week)($1.10/day) = $6.60/week
The three laborers working 50 weeks/year will have a labor cost of ...
(3 laborers)($6.60/week/laborer)(50 weeks/year) = $990/year
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In the US, the labor charge per person per week is ...
(14 hr/day)(6 day/week) = 84 hr/week
That's 40 hours of straight pay and 44 hours of overtime pay, or ...
7.25(40 +1.5(44)) = 7.25(106) = 768.50
For 150 person-weeks per year, the total US labor charge is ...
($768.50/person/week)(3 persons)(50 weeks/year) = $115,275/year
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The materials cost for a year is ...
($50/rug)(12 rugs/year) = $600/year
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The revenue is ...
($2000/rug)(12 rugs/year) = $24,000/year
Profit is the difference between revenue and the total of costs:
profit = $24,000 -($990 +600 +10000) = $12410 . . . made in Mongolia
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So, the table gets filled as follows:
(labor, material, fixed cost, revenue, profit)
<u>Mongolian-made</u>
($990, $600, $10000, $24000, $12410)
<u>US-made</u>
($115275, $600, $10000, $24000, -$101,875)
The US labor cost would be $115,275.
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<em>Comment</em>
For the given selling price, the break-even labor cost is about $1.06 per hour (on average). At US labor rates, the break-even selling price is about $10,490 per rug.
