Question

A process is replicated in another country where wages are 50 percent lower. Staffing and processing times are identical. What would be the effect on the costs of direct labor?A. Costs of direct labor would be 50 percent lower.B. Costs of direct labor would be the same. C. Costs of direct labor would be 50 percent higher. D. Cannot determine from the given information.

Answer 1

Answer:

A) costs of direct labor would be 50% lower

Explanation:

Based on the information provided within the question it can be said that in this scenario the cost of direct labor would be about 50% lower than in the current country of production. That is because the average amount that the workers get paid in that country are 50% lower, therefore the company will be paying 50% less for labor in that country as opposed to where they are now.