Question
Labor Costs and Productivity - (A) Your Texas assembly line employees earn $20 per hour and they produce an average of 8 toaster ovens per
Labor Costs and Productivity -
(A) Your Texas assembly line employees earn $20 per hour and they produce an average of 8 toaster ovens per hour. You are considering relocating your toaster over assembly facility just across the border to Mexico where wages are only $8 per hour. Transportation costs to your market would be the same. How many toaster ovens per hour would your foreign employees have to produce in order for this move to break even? (PLEASE INCLUDE FORMULAS USED TO SOLVE PROBLEM).
Transportation Costs and Taxes -
(B) Your corporation has all of its operations in California and faces a combined state and federal average corporate tax rate of 20 percent on your annual corporate earnings of $100 million. You could relocate to Nevada and eliminate your corporate state taxes (about half of your corporate tax liability) or you could relocate to Panama and eliminate all of your corporate taxes. The problem is, the vast majority of your market is in California and the transportation costs from Panama would be about $15 million per year. Additional transportation costs from Nevada would be about $1 million. Are you leaving California based on these numbers? (PLEASE INCLUDE FORMULAS USED TO SOLVE PROBLEM).
Exchange Rates -
(C) While traveling abroad in Japan, you notice that an Acura costs 1.2 million yen. Curious about what that would be in dollars, you check the exchange rate and see that its $0.011/yen. What would that Acura be worth in the U.S. if you could ship it home at no cost? (PLEASE INCLUDE FORMULAS USED TO SOLVE PROBLEM).
Labor Costs and Productivity -
(D) You are thinking about relocating your washing machine manufacturing facility from St. Louis, Missouri to Jakarta, Indonesia. Your U.S. workers earn $20 per hour and their average productivity is 10 washing machines per hour. You estimate that your workers in Indonesia would earn $3.90 per hour and will be able to produce 2 machines per hour. You typically sell about 300,000 machines per year. Your market is entirely in the U.S. and you don't think there will be a substantial market in Indonesia anytime in the foreseeable future. Should you move your facility? (PLEASE INCLUDE FORMULAS USED TO SOLVE PROBLEM).
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