Question

NewPlastic, Inc., a manufacturer of hats, had two recent contracts for hats, one from WannabecomeBig, Inc. and the other from Wanna MakeMoney, LLC. The WannaBecomeBig contract produced 5,000 hats and took 15 workers two weeks (40 hours per worker per week) to complete. They also hired 5 temporary workers for the same two weeks and time to help their workers. The Wanna Makelvoney contract produced 4,000 hats by 30 workers in three weeks (40 hours per worker per week. The workers worked a total of 60 hours overtime in order to complete the project
a) On which contract were the workers more productive? Be sure to show your work supporting your conclusion.
b) If the (revenue) price per unit for the WannabecomeBig stems was $25, and the (revenue) price per unit on the Wanna Make Money stems was $41, would your answer to part (al above change? Why or why not? Five sentences or less, please, and show your work
c) The hats for Wanna Makedoney include a logo that must be applied with heat. The heating equipment used consumes a lot of electricity which would amount to $3000. The wages for WannaBecomeBig and Wanna Make Money are $2,000 and $3,000 per worker on an average for the entire project. How would this affect your previous analysis? Five sentences or less, please, and show your work

Answer 1

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