Question

Problem 2-17

Two types of cars (Deluxe and Limited) were produced by a car manufacturer last year. Quantities sold, price per unit, and labor hours follow.

	QUANTITY		$/UNIT
Deluxe car	2,850	units sold	$	8,700	/car
Limited car	6,350	units sold	$	10,200	/car
Labor, Deluxe	21,750	hours	$	11	/hour
Labor, Limited	29,555	hours	$	14	/hour

What is the labor productivity for each car? Provide two sets of figures: units per labor hour, and dollar of output per dollar of labor expense. (Round your answers to 2 decimal places.)

	Labor Productivity
	units/hour	dollars
Deluxe car
Limited car

Answer 1

For Deluxe car:

Labor productivity (units/ hour) = 2850/21750 = .13 units per labor hour

Labor productivity (Dollars) = 2850*8700/(21750*11) = $103.64 output / dollar of labor expenses

For Limited car:

Labor productivity (units/ hour) = 6350/29555 = .21 units per labor hour

Labor productivity (Dollars) = 6350*10200/(29555*14) = $ 156.54 output / dollar of labor expenses

Now, following matrix is prepared on the basis of above calculation.

Labor Productivity
	units/hour	dollars
Deluxe car	.13	$103.64
Limited car	.21	$156.54