Question

A textile factory in the United States plays 300 workers a total of $9 million each year to produce 4.5 million shirts. A foreign factory employs 225 workers at a total cost of $1,050,000 to produce 2,500,00 shirts. How do the labor costs per shirt of the American and foreign factory compare

Answer 1

The labor cost per shirt of the American factory is 0.36 times the labor cost per shirt of the foreign company.

Explanation:

A textile factory in the United States plays 300 workers a total of $9 million each year to produce 4.5 million shirts.

Therefore, the labor cost per shirt will be

`(9 * 10^(6))/(300 * 4.5 * 10^(6)) = 0.0067`

Again, a foreign factory employs 225 workers at a total cost of $1,050,000 to produce 2,500,00 shirts.

Therefore, the labor cost per shirt will be

`(1050000)/(250000 * 225) = 0.01867`

Therefore, the labor cost per shirt of the American factory is 0.36 times (Approximate) the labor cost per shirt of the foreign company. (Answer)