assignment-1 solutions

# assignment-1 solutions - Problem Set 1 4 Labor Productivity...

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Problem Set 1 4. Labor Productivity – units/hour Model Output in Units Input in Labor Hours Productivity (Output/Input) Deluxe Car 4,000 20,000 0.20 Limited Car 6,000 30,000 0.20 Labor Productivity – dollars Model Output in Dollars Input in Dollars Productivity (Output/Input) Deluxe Car 4,000(\$8,000)= \$32,000,000 20,000(\$12.00)= \$240,000 133.33 Limited Car 6,000(\$9,500)= \$57,000,000 30,000(\$14.00)= \$420,000 135.71 The labor productivity measure is a conventional measure of productivity. However, as a partial measure, it may not provide all of the necessary information that is needed. For example, increases in productivity could result from decreases in quality, and/or increases in material cost. 5. Labor Productivity Country Output in Units Input in Hours Productivity (Output/Input) U.S. 100,000 20,000 5.00 LDC 20,000 15,000 1.33

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Capital Equipment Productivity Country Output in Units Input in Hours Productivity (Output/Input) U.S. 100,000 60,000 1.67 LDC 20,000 5,000 4.00 Yes. You would expect the capital equipment productivity measure to be higher in the U.S. than in a LDC. b. Multifactor – Labor and Capital Equipment Country Output in Units Input in Hours Productivity (Output/Input) U.S. 100,000 20,000 + 60,000= 80,000 1.25 LDC 20,000 15,000 + 5,000= 20,000 1.00 Yes, labor and equipment can be substituted for each other. Therefore, this multifactor measure is a better indicator of productivity in this instance. c. Raw Material Productivity Country Output in Units Input in Dollars Productivity (Output/Input) U.S. 100,000 \$20,000 5.00 LDC 20,000 FC \$20,000/10= \$2,000 10.00 The raw material productivity measures might be greater in the LDC due to a reduced cost paid for raw materials, which is typical of LDC’s. 6. Total Productivity Year Output in Dollars Input in Dollars Productivity (Output/Input) 2009 \$200,000 \$30,000 + 35,000 + 5,000 + 50,000 + 2,000 = \$122,000 1.64 2010 \$220,000 \$40,000 + 45,000 + 6,000 + 50,000 +3,000 = \$144,000 1.53
Partial Measure – Labor Year Output in Dollars Input in Dollars Productivity (Output/Input) 2009

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## This note was uploaded on 11/20/2011 for the course ACCOUNTING 2331 taught by Professor Milbrath during the Spring '11 term at University of Houston.

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assignment-1 solutions - Problem Set 1 4 Labor Productivity...

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