Productivity measure of units of output per dollar of input

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Reference no: EM131693160

A hamburger factory produces 60,000 hamburgers each week. The equipment used costs $10,000 and will remain productive for 4 years. The labor cost per year is $13,500.

a. What is the productivity measure of “units of output per dollar of input” averaged over the four-year period?

b. The company has the option of purchasing equipment for $13,000, with an operating life of 5 years. It would reduce labor costs to $11,000 per year. Should the company consider purchasing this equipment (using productivity arguments alone)?

Reference no: EM131693160

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