ASSIGNMENT-2

Submitted by:
SHIKHA GUPTA (FT153023)
Pg. 38-39

Q1.
JAN FEB MAR APR
Units produced 2300 1800 2800 3000
Hours per
machine
325 200 400 320
Number of
machines
3 5 4 4

=




Productivity in Jan = 2300 / (325*3) = 2.36 units/hour
Productivity in Feb = 1800 / (200*5) = 1.8 units/hour
Productivity in Mar = 2800 / (400*4) = 1.75 units/hour
Productivity in Apr = 3000 / (320*4) = 2.34 units/hour
Average Monthly Productivity = (2.36+1.8+1.75+2.34)/4 = 2.0625

Q2.
Units sold 1217
Sale price each $1700
Total labour hours 46672
Wage rate $12/hour
Total materials $60000
Total energy $4000

Productivity in sales revenue/labour expense is given by:


=



Putting values,
Sales Revenue/labour expense = (1217*1700) / (46672*12) = 3.69 dollar/hour

Q4.
Quantity $/Unit
Deluxe Car 4000 units sold $8000/car
Limited car 6000 units sold $9500/car
Labour, deluxe 20000 hours $12/hour
Labour, Limited 30000 hours $14/hour
=



Labour Productivity for deluxe car = (4000*8000)/ (20000*12) = 133.33
Labour Productivity for deluxe car = (6000*9500)/ (30000*14) = 135.71
If we assume that units sold of deluxe cars are also 6000, number of labour hours put into the
making of 6000 deluxe cars would be
(6000*8000) / (133.33*12) = 30000
Which is the same number of hours put into by the limited car labour for assembling of 6000 cars.
Thus, the difference in the labour productivity is only due to the difference in the sale price of the
two cars. And so we can say that productivity of labour is equal in both cases.
Q6.
2007 2008
Output: Sales $200,000 $220,000
Input: Labour 30000 40,000
Raw Materials 35,000 45,000
Energy 5,000 6,000
Capital 50,000 50,000
Other 2,000 3,000

=

Total productivity for 2007 = 200000 / (30000+35000+5000+50000+2000) = 100/61 = 1.64
Total productivity for 2008 = 220000 / (40000+45000+6000+50000+3000) = 55/36 = 1.52

Partial Productivity
2007 2008
Labour Productivity 6.67 5.5
Raw material productivity 5.71 4.89
Capital productivity 4 4.4

Conclusion: The labour productivity of the company has decreased from 6.67 to 5.5. This can be
accounted to the fact that the 10000 new labour force that has been incorporated in the year 2008
is unskilled as compared to the previous force. Due to this, there is raw material wastage also which
is leading to the decrease in raw material productivity. As a result, the productivity as a whole has
decreased from 2007 to 2008.

Q.7
Army Navy
Units 5500 2300
Labour Force 35 25
Hours per week 40 40
Time taken 3 2

Labour productivity in Army = 5500 / (35*40*3) = 1.31
Labour productivity in Navy = 2300 / (25*40*2) = 1.15
Labour was more productive in case of Army contract.

Q9.
2007 2008
Parcels delivered 103000 112000
Number of drivers 84 96

=



Productivity in 2007 = 103000/84 = 1226.19
Productivity in 2008 = 112000/96 = 1166.67
%age change in productivity from 2007 to 2008 =
(..)
.

= -4.85%

Q.10
1 cheeseburger (CB) = 1.25 hamburgers (HB)
1 chicken sandwich (CS) = 0.8 hamburgers (HB)
Labour force = 5
Hours per week = 40
Input hours per week = 5*40 = 200
Case1:
Sales = 700 HB + 900 CB + 500 CS = 700 HB + (900*1.25) HB + (500*0.8) HB = 2225 HB
Productivity = 2225/200 = 11.125
Case2:
Sales = 700 HB + 700 CB + 700 CS = 700 HB + (700*1.25) HB + (700*0.8) HB = 2135 HB
Productivity = 2135/200 = 10.675

Pg 255-256

Q1.
Annual Fixed Cost = F =$10000
Direct Labour = $3.50 per package
Material Cost = $4.50 per package
Selling Price = p = $12.50 per package
Variable Cost = c = $(3.50+4.50) = $8.00 per package
For break-even point,
Total Revenue = Total Cost
pQ = F + cQ
=

()

Q = 10000 / (12.50 8.00) = 2222.22 units 2223 units
Revenue at break-even = $(2223*12.5) = $27787.50

Q7.
Fixed Cost = F = $150000
Material Cost = $25 per unit
Labour Cost = $45 per unit
Variable Cost = c = $(25+45) = $70 per unit
Selling price = p = $90 per unit
For break-even,
Q = F / (p-c)
Q = 150000 / (90-70) = 7500 units
Q9.
Fixed Cost = F = $2052
Variable Cost = c = 14.4 cents per mile
Reimbursement = p = 36 cents per mile
For break-even miles,
Q = F / (p-c)
Q = (2052*100)/(36-14.4) = 9500 miles

Q10.
Fixed Cost = F = $20000
Variable Cost Chair = c1 = $25
Variable Cost bar stool = c2 = $20
Selling price = p = $50 per unit
Case1:
Sales Mix = 1:1
Number of chairs sold = Number of bar stools sold = Q
At break-even,
p (2Q) = F + Qc1 + Qc2
50*2*Q = 20000 + (25+20)*Q
Q = 363.63 units 364 units
Thus, for break-even 364 units each of chairs and bar stools need to be sold.
In dollars, break-even point is 50*(364+364) = $36363.63
Case2:
Sales Mix = 1:4
Number of bar stools sold = 4 * Number of chairs sold
Let Number of chairs sold = Q
At break-even,
P (5Q) = F + Qc1 + 4Qc2
50*5*Q = 20000 + (25+ (20*4))Q
Q = 137.93 138 units
Thus, for break-even 138 units of chairs and 552 units of bar stools need to be sold.
In dollars, break-even point is 50*(138+552) = $34482.75