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# US manufacturing company

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(Prob. 2: Productivity)

A US manufacturing company operating a subsidiary in an LDC (Less Developed Country) shows the following results:

US LDC
Sales (units) 100,000 20,000
Labor (hrs.) 20,000 15,000
Raw Mat'l (currency) \$20,000 FC 20,000
Capital equipment (hrs)60,000 5,000

(A) Compute the multifactor productivity figures for labor and capital together. Are the results better?
(B) Calculate raw material productivity figures (units/\$, where \$1 = FC 10). Explain why these figures might be greater in the subsidiary.

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#### Solution Preview

A US manufacturing company operating a subsidiary in an LDC (Less Developed Country) shows the following results:

US LDC
Sales (units) 100,000 20,000
Labor (hrs.) 20,000 15,000
Raw Mat'l (currency) \$20,000 FC 20,000
Capital equipment (hrs)60,000 5,000

(A) Compute the multifactor productivity figures for labor and capital together. Are the results better?

US

Total Sales = 100,000

Labor = ...

\$2.19