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Chapter 2 Problems

5 A U.S. manufacturing company operating a subsidiary in an LDC (less deelopedcountry! sho"s the follo"ing results#

U.S LDC

Sales (units) 100,000 20,000Labor (hours) 20,000 15,000

Raw Materials (currency) $20,000 FC 20,000Capital !uip"ent (hours) #0,000 5,000

a. Calculate partial labor and productiity figures for the parent and the subsidiary.Do the result seem misleading$

b. Compute the multifactor productiity figures for labor and capital together. Arethe results better$

c. Calculate ra" material productiity figures (unit%& "here &' )C '*!. +,plain"hy these figures might be greater in the subsidiary.

- arious financial data for 2**/ and 2**5 follo". Calculate the total productiitymeasure and the partial measures for labor0 capital0 and ra" materials for thiscompany for both years. 1hat do these measures tell you about this company$

2004 2005

utput% Sales $200,000 $220,000&nput% Labor '0,000 0,000

Raw Materials '5,000 5,000

nery 5,000 #,000Capital 50,000 50,000

ther 2,000 ',000

'e A retail store had sales of &/50*** in April and &5-0*** in ay. 3he store employseight full4time "orers (they "or a /*4hour "ee!. 6n April the store also had seenpart4time "orers at '* hours per "ee0 and in ay the store had 7 part4timers at '5hours per "ee (assume four "ees in each month!. Using sales dollars as themeasure of output0 "hat is the percentage change in productiity from April to ay$

2e A fast4food restaurant seres hamburgers0 cheeseburgers0 and chicen sand"iches.3he restaurant counts a cheeseburger as e8uialent to '.25 hamburgers and chicensand"iches as *.9 hamburgers. Current employment is fie full4time employees ("ho"or a /*4hour "ee!. 6f the restaurant sold :** hamburgers0 7** cheeseburgers0 and5** chicen sand"iches in one "ee0 "hat is the productiity$ 1hat "ould itsproductiity hae been if it had sold the same number of sand"iches (20'**! but themi, "as :** of each type$

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- 3otal Productiity

6ear utput in ollars &nput in ollars ro-ucti.ity (utput/&npu

177 $200,000 $'0,0004'5,00045,000450,00042,000 $122,000 200,000/122,000 1#

1777 $220,000 $0,00045,0004#,000450,0004',000 $1,000 220,000/1,000 15'

Partial easure < Labor

6ear utput in ollars &nput in ollars ro-ucti.ity (utput/&nput)

177 $200,000 $'0,000 200,000/'0,000 ##3

1777 $220,000 $0,000 220,000/0,000 550

Partial easure < =a" aterials

6ear utput in ollars &nput in ollars ro-ucti.ity (utput/&nput)177 $200,000 $'5,000 200,000/'5,000 531

1777 $220,000 $5,000 220,000/5,000 7

Partial easure < Capital

6ear utput in ollars &nput in ollars ro-ucti.ity (utput/&nput)

177 $200,000 $50,000 200,000/50,000 00

1777 $220,000 $50,000 220,000/50,000 0

3he oerall productiity measure is declining0 "hich indicates a possible problem. 3hepossible measures can be used to indicate cause of declining productiity. 6n this case0 itis a combination of declines in both labor productiity and ra" material productiity0 butan increase in capital productiity. )urther inestigation should be taen to e,plain thedrops in both labor and ra" materials productiity. An increase in the cost of both ofthese measures0 "ithout an accompanying increase in the selling price might e,plainthese measures.

'e.

Month utput in ollars &nput in +ours ro-ucti.ity (utput/&nput) ercentae Chane8pril $5,000 1,5#0 5,000/1,5#0 25

May $5#,000 1,20 5#,000/1,20 '033 ('033925)/25 ##3:

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2e.

art utput in +a"burer !ui.alents &nput in +ours ro-ucti.ity (utpu

+a"burers999 300

Cheeseburers999 700;(125) 1125

Chic