Question

Problem 2-18 A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results: U.S. LDC Sales (units) 100,000 20,000 Labor (hours) 20,000 15,000 Raw materials (currency) $ 20,000 FC* 20,000 Capital equipment (hours) 60,000 5,000 *Foreign Currency unit a. Calculate partial labor and capital productivity figures for the parent and subsidiary. (Round your answers to 2 decimal places.)

Answer 1

U.S. labor= 5

LDC labor = 1.3

U.S. capital= 1.67

LDC capital = 4

Step-by-step explanation:

Calculation for both partial labor and capital productivity figures for the parent subsidiary

Calculation for U.S. labor

U.S. labor=100,000/20,000

U.S. labor= 5

Calculation for LDC labor

LDC labor=20,000/15,000

LDC labor = 1.3

Calculation for U.S. capital

U.S. capital=100,000/60,000

U.S. capital= 1.67

Calculation for LDC capital

LDC capital=20,000/5,000

LDC capital = 4

Therefore based on the above calculations we can see that U.S labor productivity is much better because the labor productivity of U.S labor is higher than that of LDC labor and for the capital productivity the LDC is much better because capital productivity of LDC is higher than that of U.S. capital.