In Cambodia, seven laborers, each making the equivalent of $ 3.50 per day, can p
ID: 344408 • Letter: I
Question
In Cambodia, seven laborers, each making the equivalent of $ 3.50 per day, can produce 42 units per day. In China, ten laborers, each making the equivalent of $ 2.25 per day, can produce 51 units. In Billings comma Montana, four laborers, each making $ 63.00 per day, can make 102 units. Shipping cost from Cambodia to Denver, Colorado, the final destination, is $ 1.75 per unit. Shipping cost from China to Denver is $ 1.20 per unit, while the shipping cost from Billings comma Montana to Denver is $ 0.20 per unit.
Based on total costs (labor and transportation) per unit, the most economical location to produce the item is _______ (Billings Montana, China, or Cambodia)
with a total cost (labor and transportation) per unit of $______ nothing. (Enter your response rounded to two decimal places.)
Explanation / Answer
Total per unit labor cost = Labor cost per unit per day x Number of labourers / Units produced per day
Therefore ,
Per unit labor cost in Cambodia = $3.5 x 7/ 42 = $0.583
Per unit labor cost in China = $2.25 x 10 / 51 = $0.441
Per unit labor cost in Montana =$63 x 4 /102 = $2.47
Thus,
Total cost ( labor and transportation ) per unit from Canbodia = $0.583 + $1.75 = $ 2.333
Total cost ( labor and transportation ) per unit from China = $0.441 + $1.20 = $1.641
Total cost ( labor and transportation ) per unit from Montana = $2.47 + $0.20 = $2.67
Therefore , the most economical location to produce with minimum total cost will be China
BASED ON TOTAL COSTS ( LABOUR AND TRANSPORTATION ) PER UNIT, THE MOST ECONOMICAL LOCATION TO PRODUCE THE ITEM IS CHINA WITH A TOTAL COST ( LABOR PLUS TRANSPORTATION ) PER UNIT OF $1.641
BASED ON TOTAL COSTS ( LABOUR AND TRANSPORTATION ) PER UNIT, THE MOST ECONOMICAL LOCATION TO PRODUCE THE ITEM IS CHINA WITH A TOTAL COST ( LABOR PLUS TRANSPORTATION ) PER UNIT OF $1.641