Question

32. A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country)shows the following result. Calculate the difference in their labor productivity. US LDC Sales. (units) 50000 12000 25000 12000 Labor (hours) Raw material (currency) $10,000 FC 10,000 Capital Equipment (hours) 50000 50000 1 32 1 unit/hour 7 unit/hour 3 unit/hour 5 unit/hour . 33. A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country)shows the following result. Calculate the difference in their raw material productivity. If 1$ = 10FC (same table in question 82) . . 1 unit/hour 7 unit/hour . 3 unit/hour • 5 unit hour

Answer 1

32. Labor productivity can be calculated using the following formula

Labor productivity = Total number of output units/Total number of input hours

Here in this case Labor productivity for the US countriy will be 50000/25000 that will be 2

and in the case of Labor productivity for the LDC countries will be 12000/12000 that will be 1

Hence the difference will be 2-1, so the answer will be 1 unit/hour (option one is the correct answer)

33. Difference in raw material productivity can be calculated using the below formula,

Raw material productivity = Total number of output units/Value of raw materials

US company Raw material productivity = 50000/10000 that will be 5

LDC company Raw material productivity = 12000/1000 that will be 12 ($1 = 10FC, so 10000 FC will be $1000)

Hence the difference will be 12-5 = 7unit/hour (option two is the correct answer)