Question

Refer to Problem 1.12. The pay will be $8per hour for employees. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This added investment has a cost of $100per month, but he will achieve the same output (an increase to 1,875) as the change in labor-hours. Which is the better decision?

Answer 1

Without specifics on the hours needed for additional labor, it's impossible to directly compare the additional labor cost at $8 per hour to the $100 monthly cost for a new blender. However, if the extra labor cost exceeds $100, purchasing the blender would be the better option.

Step-by-step explanation:

To determine which decision is better for Charles Lackey regarding improving productivity, we need to compare the cost of extra labor versus the cost of purchasing a new blender.

Let's consider the additional labor cost. If hiring more employees at $8 per hour achieves the desired output increase of 1,875 units, multiply the number of additional hours required by the hourly pay to find the additional monthly labor cost. Conversely, the cost of the blender is an upfront fee of $100 per month.

To finalize the decision, Lackey would need to compare the total additional labor cost at $8 per hour for the necessary hours to the $100 monthly investment in the new blender. Without specific numbers on hours needed for labor, it is not possible to give a direct answer. However, if the total labor cost exceeds $100 per month, purchasing the new blender would be more cost-effective.