Question
A burger factory produces 70,000 burgers each week. The equipment used costs $8,000 and will remain productive for three years. The labor cost per year
A burger factory produces 70,000 burgers each week. The equipment used costs $8,000 and will remain productive for three years. The labor cost per year is $11,000.
a) What is the productivity measure of "units of output per dollar of input" averaged over the three-year period? Assume that there are 52 weeks per year. Round your answer to one decimal place.
Productivity: ??? burgers/dollar
b) We have the option of $11,000 equipment, with an operating life of four years. It would reduce labor costs to $8,000 per year. Should we consider purchasing this equipment (using productivity arguments alone)? Assume that there are 52 weeks per year. Round your answer for productivity to one decimal place.
For the expensive machine, productivity is ??? burger /dollar input.
Because the productivity of the expensive machine is -Select-higher lower, it would be a -Select-good or bad investment based on this single criterion.
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