Question

What is the hourly compensation per worker for a company with a unit labor cost of 0.9 and an hourly output per worker of $32.50? round your answer if necessary to the nearest whole number

Answer 1

Given Information:

Unit labor cost = 0.9

Hourly output per worker = $32.50

Required Information:

Hourly compensation per worker = ?

Answer:

Hourly compensation per worker = $36

Step-by-step explanation:

The unit labor cost is given by

$U = \frac{O}{W}$

Where W is the hourly compensation per worker, O is the hourly output per worker and U is the unit labor cost.

Re-arranging for the hourly compensation yields,

$U = \frac{O}{W}\\\\W =\frac{O}{U}$

Now substitute the given values

$W =\frac{32.50}{0.9}\\\\W = 36.11\\\\W = \ 36$

Therefore, the hourly compensation per worker is $36.

Bonus:

Unit labor cost is the amount incurred with regard to labor expenses to produce one unit of a product. Calculating the unit labor cost helps in analyzing other aspects of the business such as product pricing, profit margin, sales etc.