A U.S. manufacturing company operating a subsidiary in an LDC (less-developed co

Question

A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results: U.S. 106,000 19,900 LDC 20,300 14.900 Sales (units) Labor (hours) Raw naterials (currency) $ 19,700 FC 19,900 Capital equipment (hours) 59,700 4,900 Foreign Currency unt a. Calculate partial labor and capital productivity figures for the parent and subsidiary. (Round your answers to 2 decimal places.) U.S. LDC Labor Capital productivity b. Compute the multifactor productivity figures for labor and capital together. (Round your answers to 2 decimal places.) U.S LDC Multifactor productivity c. Calculate raw material productivity figures (units/$ where $1- FC 10). (Round your answers to 2 decimal places.) U.S LDC Raw material productivity

Explanation / Answer

Labour hours in the US = 19900

Labour hours in LDC = 14900

Total sales in the US = 106000 units

Total sales in LDC = 20300 units

Capital equipment in the US = 59700 hours

Capital equipment in LDC = 4900 hours

Ans a)

Labour partial productivity in the US = Total sales in the US / Labour hours in the US

= 106000 / 19900

= 5.33 units per labour hour

Labour partial productivity in LDC = Total sales in LDC / Labour hours in LDC

= 20300 / 14900

= 1.36 units per labour hour

Capital partial productivity in the US = Total sales in the US / Capital equipment in the US

= 106000 / 59700

= 1.77 units per capital hour

Capital partial productivity in LDC = Total sales in LDC / Capital equipment in LDC

= 20300 / 4900

= 4.14 units per capital hour

Ans b)

Total hours spent for labour and capital in the US = 19900 + 59700

= 79600 hours

Multifactor productivity for the US = Total sales in the US / Cumulative hours spent

= 106000 / 79600

= 1.33 units per hour

Total hours spent for labour and capital in LDC = 14900 + 4900

= 19800 hours

Multifactor productivity for LDC = Total sales in LDC / Cumulative hours spent

= 20300 / 19800

= 1.02 units per hour

Ans c)

Money spent on raw materials in the US = $19700

Raw material productivity = Total sales in the US / Money spent on raw materials

= 106000 / 19700

= 5.38 units per dollar spent

Money spent on raw materials in LDC = $1990

Raw material productivity = Total sales in LDC / Money spent on raw materials

= 20300 / 1990

= 10.20 units per dollar spent

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