A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results: U.S. LDCSales (units) 100,000 20,000Labor (hours) 20,000 15,000Raw materials (currency) $20,000 FC 20,000Capital equipment (hours) 60,000 5,000a. a. Calculate partial labor and capital productivity i gures for the parent and subsidiary. Do the results seem confusing?b. Compute the multifactor productivity i gures for labor and capital together. Do the results make more sense?c. Calculate raw material productivity i gures (units/$ where $1 5 FC 10). Explain why these i gures might be greater in the subsidiary.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 6CE

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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)                                        $20,000 FC                                  20,000
Capital equipment (hours)                                    60,000                                            5,000a.                                                 a. Calculate partial labor and capital productivity i gures for the parent and subsidiary. Do the results seem confusing?
b. Compute the multifactor productivity i gures for labor and capital together. Do the results make more sense?
c. Calculate raw material productivity i gures (units/$ where $1 5 FC 10). Explain why these i gures might be greater in the subsidiary.

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