Question

A team of five laborers working in a garment factory in Indonesia divides the task of making men's dress shirts for export to the United States. Each laborer works 10 hours a day, six days a week, and is paid the Indonesian minimum wage of $2.50 per day. In one week, the team can make 500 shirts. The company spends $10,000 each week to cover advertising, administration, machinery, transportation, and other expenses. Each shirt sold for $40 in the United States. Total Labor Cost, Labor Cost Per Shirt, Total Revenue, Fixed Costs-$10,000, Total Profit, Profit Per Shirt? How much would it cost to pay five workers at the U.S. federal minimum wage to do the same job in the same amount of time? Use $7.25 as the minimum wage and remember that employees in the United States must be paid time-and-a-half (1.5 times the normal hourly rate) for each hour worked over 40 hours per week.

Answer 1

Total Labor 750
Labor Cost Per Shirt 2.50
Total Revenue 20,000
Total Profit 9247.50
Profit Per Shirt 18.49