Question: The management team for Buddys Bats is considering two locations for a plant to manufacture wooden baseball bats. The fixed setup costs for both plants
The management team for Buddys Bats is considering two locations for a plant to manufacture wooden baseball bats. The fixed setup costs for both plants are identical.
Plant A can produce 500 bats per week. The plant works one 8 hour shift per day with 6 staff. The plant works 5 days per week. The average wage is $22 per hour. The plant would use 600 units of maple and can buy maple at $5 per unit. Based on location and staffing levels, the plant would be assigned an overhead allocation of $1000 per week.
Plant B can produce 500 bats per week. The plant works one 8 hour shift per day with 7 staff. The plant works 5 days per week. The average wage is $20 per hour. The plant would use 625 units of maple to make the bats and can buy maple at $4 per unit. Based on location and staffing levels, the plant would be assigned an overhead allocation of $1,500 per week.
You want to compare the labor productivity between the two locations as part of the decision making process. What is the appropriate labor productivity for comparison for Plant A? Use 3 decimal places.
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