Answer:
This means that each worker would need to produce an additional 0.5 units per hour to offset the additional labor and capital costs and achieve a break-even point for the change.
Step-by-step explanation:
Productivity is the measure of the efficiency of production, which can be calculated as the ratio of output to input. In a business context, productivity typically refers to the amount of output that is generated per unit of input, such as labor, capital, or time.
To calculate the increase in labor productivity required to achieve a break-even point for the change in production, we can use the following formula:
Break-even point = (Additional labor cost + Additional capital cost) / Increase in labor productivity
The additional labor cost can be calculated as follows:
Additional labor cost = (10 workers * $25 per hour per worker * 2 additional hours per worker) = $500
The additional capital cost is given as $1,000 per day.
To find the increase in labor productivity required to achieve a break-even point, we need to solve for this variable in the above formula:
Break-even point = ($500 + $1,000) / Increase in labor productivity
Break-even point = $1,500 / Increase in labor productivity
Assuming that the company wants to maintain the same level of output (i.e., 1,000 units per day) with the additional 2 hours of work, the total number of hours worked per day will be:
Total hours worked per day = 10 workers * 8 hours per day + 10 workers * 2 additional hours per worker = 120 hours per day
Therefore, the labor productivity required to achieve a break-even point for this change can be calculated as follows:
Increase in labor productivity = ($1,500 / 120 hours) / $25 per hour per worker = 0.5 units per hour per worker
This means that each worker would need to produce an additional 0.5 units per hour to offset the additional labor and capital costs and achieve a break-even point for the change.