Check My Work (a remaining) A hamburger factory produces 000 hamburgers each wee

Question

Check My Work (a remaining) A hamburger factory produces 000 hamburgers each week. The equipment used costs $13,000 hamburgers and will remain productive for three years. T he labor cost per year is $10,000. productivity measure of "units of output per dollar of input" averaged over the three-year period? Assume that there are 52 weeks per Assume that there are 52 weeks per yeat Round your answer to one decimal place. Productivity: hamburgers/dollar b. The company has the option of purchasing equipment for $15,000, with an operating life of four years. I would reduce labor costs to $7,000 per year. Should it consider purchasing this one decimal place equipment (using productivity arguments alone)? Assume that there are 52 weeks per year. Round your ansmer for productivity to for the expensive machine, productivity is based on this single criterion. hamburgers/dolar input. Because the productivity of the expensive machine is Select

Explanation / Answer

a. Productivity = total units produced/the total labor cost plus total equipment cost

= 60,000*(52)*(3)/[13,000+10,000*3] = 217.7 hamburgers/dollar

b. We have the option of $15,000 equipment, with an operating life of 4 years. It would reduce labor costs to $7,000 per year.

Hence Productivity = 60,000*52*4/(15,000+7,000*4) = 217.7 Hamburgers/dollar

Since the prodcuctvity remains the same, hence no meaning installing the new expensive machine.

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