Question: In determining whether It is economically advisable to invest $3.5 million per million pairs of capacity for a plant facilities upgrade that will boost labor productivity by 25%, it is accurate to say that the resulting drop in labor costs per pair produced
1. will be $0.15 (from $0. 75 to $0.60) at a plant where total annual compensation per employee is currently $3,000 and labor productivity is 4,000 pairs per worker-the labor cost reduction would be a far larger $1.20 per pair at a plant where total annual compensation per employee is currently $24,000 and labor productivity is 4,000 pairs per worker.
2. will be the same for all of the company's plants because the gains in labor productivity are 25% irrespective of what other differences In labor-related conditions may exist.
3. will be greater for Asia-Pacific plants with 8-milllon pairs of capacity than for Asia-Pacific plants with 4-million pairs of capacity.
4. will be greatest at plants where total annual compensation is comparatively low and labor productivity is comparatively high.
5. will be smallest at plants where total annual compensation is comparatively high and labor productivity is also comparatively high.