a. Calculate the productivity of the company. b. What will be the new productivity if the company decides to make 150 chairs per week? c. If the company decides to improve productivity through materials costs reduction only, how much these costs must be reduced in order to achieve a 10 percent increase in total productivity?
ABC Corporation is a furniture manufacturing company working on a 40 hour per week basis makes 135 chairs. The sales price is $75 each, and the company has the following costs:
• Direct materials $790
• Direct labor $360
• Overhead $550
Required:
a. Calculate the productivity of the company.
b. What will be the new productivity if the company decides to make 150 chairs per week?
c. If the company decides to improve productivity through materials costs reduction only, how much these costs must be reduced in order to achieve a 10 percent increase in total productivity?
d. If the company repeats the same exercise as in (c) above, but through labor costs reduction, how much these costs must be reduced in order to achieve a 10 percent increase in total productivity?
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