Question

Two types of cars (Deluxe and Limited) were produced by a car manufacturer last year. Quantities sold, price per unit, and labor hours follow. What is the labor productivity for each car? Explain the problem(s) associated with the labor productivity. (Answer in Appendix D) Deluxe car Limited car Labor, Deluxe Labor, Limited Quantity 4,000 units sold 6,000 units sold 20,000 hours 30,000 hours $/Unit $8,000/car $9,500/car $12/hour $14/hour

Answer 1

Answer:

Unit less Labor Productivity:

For Deluxe Cars=133.333

For limited Cars=135.714

Labor Productivity in units/hour:

For Deluxe Cars=0.2 units/hour

For limited Cars=0.2 units/hour

Labor Productivity in units/hours does not consider the price at which car is sold and the labor rate while the unit less labor productivity considers the both.

Explanation:

Unit less Labor Productivity Calculations:

For Deluxe Cars=$\frac{4000*8000/car}{20000hour*12/hour}$

For Deluxe Cars=133.333

For limited Cars=$\frac{6000*9500/car}{30000hour*14/hour}$

For limited Cars=135.714

Labor Productivity in units/hour

For Deluxe Cars=$\frac{4000 units}{20000hour}$

For Deluxe Cars=0.2 units/hour

For limited Cars=$\frac{6000 units}{30000hours}$

For limited Cars=0.2 units/hour

Labor Productivity in units/hours does not consider the price at which car is sold and the labor rate while the unit less labor productivity considers the both. But a manager especially department manager who has better understanding of units/hour will not use the unit less labor productivity. Unit less labor productivity is used by high level managers.