1. You’ve been tasked to analyze labor costs for two potential operating sites. The first site is in Texas and you’ll be paying $60 per day to produce 50 units. The second option is Mexico where you’ll be paying only $30 per day to produce 20 units. Which of the following statements is valid?
a. Because your labor costs in Mexico are ½ of what you’ll be paying in Texas, you should move your facility to Mexico
b. Because you produce more units per day in Texas, you should move to Texas
c. Your labor cost per unit in Texas is $1.2 per unit and in Mexico your costs are $1.5 per unit. You should move to Texas
2. In Myanmar, 6 laborers, each making the equivalent of $3 per day can produce 40 units per day. In rural Cambodia, 10 laborers, each making the equivalent of $2.00 per day, can produce 45 units. In Montana, 2 workers, each making $60 per day can make 100 units. Based on labor costs alone, which location would be the most economical to produce the item?
a. Myanmar
b. Cambodia
c. Montana
3. As a summer job, you’re working for a building maintenance company and specifically in the carpet division. For the month of June, the division cleaned 65 carpets but consumed the following resources: Labor 520 hours at $13.00 per hour; Cleaning Fluid: 100 gallons at $5 per gallon; Machine Rental: 20 days at $50 per day Which of the following describes your labor productivity per hour?
a. 5 carpets per hour
b. $104 per unit
c. $84 per unit
d. $111.69 per unit
4. As a summer job, you’re working for a building maintenance company and specifically in the carpet division. For the month of June, the division cleaned 65 carpets but consumed the following resources: Labor 520 hours at $13.00 per hour; Cleaning Fluid 100 gallons at $5 per gallon; Machine Rental 20 days at $50 per day. What were your total costs for the month of June?
a. $6760
b. $7270
c. $8260
d. $7760
5. Your company has experienced significant growth and is considering to lease a facility in either Pasco, Yakima or Wenatchee. You’ve been tasked to prepare an economic analysis given the following information: Annual costs for building, equipment and administration would be $40,000 for Pasco, $60,000 for Yakima and $100,000 for Wenatchee Labor and materials are expected to be $8 per unit for Pasco, $4 per unit for Yakima and $5 per unit for Wenatchee. The Pasco location would increase system transportation costs by $50,000 per year, the Yakima location by $60,000 per year and the Wenatchee location by $25,000 per year. Annual volume at all locations is anticipated to be 10,000 units. Which location will give you the lowest total cost?
a. Pasco
b. Yakima
c. Wenatchee
6. The fixed and variable costs for three potential manufacturing plant sites are shown below: Site A has a fixed cost of $500 per year and a variable cost of $11 per unit Site B has a fixed cost of $1,000 per year and a variable cost of $7 per unit Site C has a fixed cost of $1,700 per year and a variable cost of $4 per unit For an annual production of 200 units, which site is best (lowest total cost)?
a. Site A
b. Site B
c. Site C