1. A company that manufactures radios had sales last year of $3,750,000. Total labor costs for the year were $1,500,000, capital costs were $1,275,000, and materials costs were $750,000. What was the company's productivity based on this information?
2. The Electro-Lite Electronics company has recently automated part of its production process. The labor and capital costs for the last two years are shown below along with the value added by this process. Compare the productivity of labor and capital for these years.
Two Years Ago Last Year
Value added $1,365,000 $1,425,000
Labor Costs 870,000 375,000
Capital Costs 160,000 924,000
3. The company mentioned in problem 4 is considering substituting capital for labor by buying some automated equipment to perform an operation previously done manually. This equipment will cost $200,000 per year to own and operate. What must the labor savings be to produce an increase in overall productivity?
4. Michaels Manufacturing Company wants to determine the overall productivity of its operations. The company has data for a month last year and good current data (see below). The sales price of the product is $40.00, the wage rate including fringe benefits is $18.00 per hour, the resin cost $0.60 per pound, and the energy cost per BTU is $.50. These costs can be applied to both years. What is the productivity then and now? At what rate is productivity changing?
Last Year This Year
Production (units) 2,000 2,150
Labor hours 600 550
Resin (pounds) 100 90
Capital ($) 20,000 23,000
Energy (BTUs) 6,000 5,700
5. Referring to Problem 7, suppose the company wants to increase productivity by 5%. How much labor savings must occur?