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 Sales (units) Labor (hours) Raw materials (currency) Capital equipment (hours) U.S 19,900 59,700 LDC 20,300 14,900 106,000 $ 19,700 FC 19,900 4,900 Foreign Currency unit a. Calculate partial labor and capital productivity figures for the parent and subsidiary. (Round your answers to 2 decimal places.) U.S LDC Labor productivity 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

Solution:

(a) Partial labor and capital productivity for the parent and subsidiary are calculated as below:

Labor productivity

Labor productivity = Sales / Labor

U.S. = 106,000 / 19,900 = 5.33

LDC = 20,300 / 14,900 = 1.36

Capital productivity

Capital productivity = Sales / Capital equipment

U.S. = 106,000 / 59,700 = 1.76

LDC = 20,300 / 4,900 = 4.14

(b) Multifactor productivity for labor and capital together is calculated as;

Multifactor productivity = Sales / (labor + capital)

U.S. = 106,000 / (19,900 + 59,700) = 1.33

LDC = 20,300 / (14,900 + 4,900) = 1.03

(c) Raw material productivity is calculated as;

Raw material productivity = Sales / Raw materials

U.S. = 106,000 / 19,700 = 5.38

LDC = 20,300 / (19,900/10) = 10.20 ($1 = FC 10)

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