The Big Black
Bird Company (BBBC) has a large order for special plastic-lined military
uniforms to be used in an urgent military operation. Working the normal two
shifts of 40 hours, the BBBC production process usually produces 2,500 uniforms
per week at a standard cost of $120 each. Seventy employees work the first
shift and 30 the second. The contract price is $200 per uniform. Because of the
urgent need, BBBC is authorized to use around the-clock production, six days
per week. When each of the two shifts works 72 hours per week, production
increases to 4,000 uniforms per week but at a cost of $144 each.
a. Did the
productivity ratio increase, decrease, or remain the same? If it changed, by
what percentage did it change?
b. Did the labor
productivity ratio increase, decrease, or remain the same? If it changed, by
what percentage did it change?
SOLUTION PREVIEW
a. Did the
productivity ratio increase, decrease, or remain the same? If it changed, by
what percentage did it change?
Productivity ratio = output
Input
Present:
Value of output = 2500 uniforms * std. cost of $120 =
$300,000
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