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VladimirAG [237]
3 years ago
15

A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improve

ments. Now refer to the Income Statement in Chester's Annual Report. The direct labor costs for Chester were $32,680. These labor costs could have been $20,000 higher if investments in training that increased productivity had not been made. What was the productivity index for Chester that led to such savings?
Business
1 answer:
user100 [1]3 years ago
8 0

Answer: 161.1%

Explanation:

Given that,

Direct labor costs for Chester = $32,680

Labor costs could have been $20,000 higher

Productivity index shows the ratio between the labor costs with improvements and labor costs without improvement in production.

Productivity Index = \frac{Labor\ cost\ without\ improvement}{Labor\ cost\ with\ improvement}\times100

                              = \frac{32,680+20,000}{32,680}\times100

                              = 161.1%

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