calculate the break-even point: 1) To determine the percentage increase in productivity, we first need to calculate the output per labor hour before and after the improvement. Before the improvement: Output per labor hour = Output Rate / Workforce = 60 fittings per hour / 5 employees = 12 fittings per hour per employee After the improvement: New Output Rate = Existing Output Rate + 25% of Existing Output Rate = 60 fittings per hour + 0.25 * 60 fittings per hour = 75 fittings per hour New Output per labor hour = New Output Rate / New Workforce = 75 fittings per hour / 6 employees = 12.5 fittings per hour per employee Percentage increase in productivity = (New Output per labor hour - Old Output per labor hour) / Old Output per labor hour * 100% = (12.5 - 12) / 12 * 100% = 4.17% 2) To analyze the financial implications, we need to conduct a cost-benefit analysis. Additional labor cost incurred by hiring one more employee: Additional Labor Cost = Labor Cost per hour per employee * Number of additional employees = $24 per hour * 1 = $24 per hour Savings on material costs per fitting with the new process: Old Material Cost per Fitting = $32 New Material Cost per Fitting = $20 Savings on Material Cost per Fitting = Old Material Cost per Fitting - New Material Cost per Fitting = $32 - $20 = $12 per fitting Given the new output rate, the savings on material costs per hour would be: Savings on Material Cost per Hour = Savings on Material Cost per Fitting * New Output Rate = $12