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If a company invests in production improvement option D that will boost labor productivity by 50%, while its annual depreciation costs will rise by an
If a company invests in production improvement option D that will boost labor productivity by 50%, while its annual depreciation costs will rise by an amount equal to 10% of the investment costs associated with installing option D, it is accurate to say that its labor costs per pair produced will decline from $5.00 per pair to $3.33 for a production facility in the Asia-Pacific that currently has labor productivity of 3,600 pairs per worker and total regular compensation (which does not include overtime pay) of $18,000 annually. from $6.00 per pair to $3.81 for a production facility in Latin America that currently has labor productivity of 3,500 pairs per worker and total regular compensation (which does not include overtime pay) of $20,000 annually. from $4.61 per pair to $3.50 for a production facility in the Asia-Pacific that currently has labor productivity of 3,800 pairs per worker and total regular compensation (which does not include overtime pay) of $17,500 annually. by the same dollar amount in all of the company's production facilities that implement option D because the gains in labor productivity are 50% irrespective of what other differences in labor-related conditions may exist. the greatest in whichever company production facility currently has the lowest total employee compensation per year
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