Question

Two types of cars (Deluxe and Limited) were produced by a car manufacturer last year. Quantities sold, price per unit, and labor hours are given below.
QUANTITY $/UNIT
Deluxe car 5,000 units sold $ 8,500 /car
Limited car 6,250 units sold $ 10,100 /car
Labor, Deluxe 21,250 hours $ 13 /hour
Labor, Limited 29,950 hours $ 15 /hour

What is the labor productivity for each car? Provide two sets of figures: units per labor hour, and dollar of output per dollar of labor expense. (Round your answers to 2 decimal places.)

Answer 1

Answer and Explanation:

Labor Productivity in Units per hour

Labor Hours Productivity(In units) =  Total Output / Input hours

For Deluxe Cars =  5,000 units / 21,250 hours = 0.24 units per hour (approx)

For Limited Cars =  6,250 units / 29,950 hours = 0.21  units per hour (approx)

Labor Productivity in dollars

Labor Hours Productivity(In dollars) =  Total Output in dollar / (Input hours x rates)

For Deluxe Cars =  (5,000 units x $8,500) / (21,250 hours x $13) = $42,500,000 / $276,250 = $153.84 per unit

For Limited Cars =  (6,250 units x $10,100) / (29,950 hours x $15) = $63,125,000 / $499,250 = $126.44 per unit