Answer:
(A) THE WORKERS WERE MORE PRODUCTIVE ON THE WANNA BECOME BIG, INC CONTRACT AS THEY PRODUCE
(B)THE ANSWER IN (A) DOES NOT CHANGE. THE WORKERS ARE STILL MORE PRODUCTIVE IN THE WANNA BECOME BIG, INC CONTRACT AS THEY PRODUCE MORE REVENUE PER HOUR OF LABOR.
(C)NO. WANNA BECOME BIG STILL PRODUCES MORE REVENUE
Explanation:
(A)
Wanna Become Big, Inc:
- 5000 hats produced
- 2 weeks
- 20 workers (15+5)
- 40 hours per worker per week
We need to determine the number of hats that were produced per hour of labor
20 x 2 x 40 = 1600 hours of labor
5000/ 1600 = 3,25 hats per hour i.e. 3 hats are produced per hour.
Wanna Make Money, LLC:
- 4000 hats produced
- 30 workers
- 3 weeks
- 40 hours per worker per week
- 60 overtime hours
We need to determine the number of hats that were produced per hour of labor
30 x 3 x 40 = 3600
3600 = 60 = 3660 hours of labor
4000/ 3660 = 1,0928 hats per hour i.e. 1 hat is produced per hour
Answer: THE WORKERS WERE MORE PRODUCTIVE ON THE WANNA BECOME BIG, INC CONTRACT AS THEY PRODUCE
(B)
In order to be able to answer this question, we need to determine the total amount of revenue that is produced for each contract, and divide it by the number of labor hours in order to determine if the level of productivity changes because the revenue figures are different for each contract.
Wanna Become Big, Inc:
$25 x 5000 = $125 000
$125 000 / 1600 hours = $78.13 revenue produced per hour
Wanna Make Money, LLC:
$41 x 4000 = $164 000
$164 000 / 3660 hours = $44.81 revenue produced per hour
ANSWER: THE ANSWER IN (A) DOES NOT CHANGE. THE WORKERS ARE STILL MORE PRODUCTIVE IN THE WANNA BECOME BIG, INC CONTRACT AS THEY PRODUCE MORE REVENUE PER HOUR OF LABOR.
(c)
No. Wanna Become Big, Inc still produces more revenue.
Wanna Become Big:
Revenue $125 000
Wages ($40 000) *[20 x 2 000]
Net Income $85 000
Wanna Make Money:
Revenue $164 000
Wages ($90 000) *[30 x 3000]
Electricity (3 000)
Net Income $71 000
