3. A toy manufacturer produces 2500 units of soft toys per month (20 days working) sold at Rs. 110 each. The cost of synthetic fur is Rs.100 per meter, cost of labour is Rs.160 per day (8 hours working) and the cost of sponge waste for filling is Rs.50 per kg. The manufacturer employs 20 workers per day, and uses 1000 meters of synthetic fur and 250 kg of sponge waste per month. What is the labour productivity and raw material productivity of the firm? What is the total productivity of the firm?
Question
- A toy manufacturer produces 2500 units of soft toys per month (20 days working) sold at Rs. 110 each. The cost of synthetic fur is Rs.100 per meter, cost of labour is Rs.160 per day (8 hours working) and the cost of sponge waste for filling is Rs.50 per kg. The manufacturer employs 20 workers per day, and uses 1000 meters of synthetic fur and 250 kg of sponge waste per month. What is the labour productivity and raw material productivity of the firm? What is the total productivity of the firm?
Solution
To calculate the labour productivity, raw material productivity, and total productivity of the firm, we first need to understand the definitions of these terms:
- Labour Productivity: It is the output per labour hour.
- Raw Material Productivity: It is the output per unit of raw material.
- Total Productivity: It is the ratio of total output to the sum of labour and raw material inputs.
Now, let's calculate each of these for the given firm:
-
Labour Productivity:
- Total output per month = 2500 units
- Total labour hours per month = 20 days * 8 hours/day * 20 workers = 3200 hours
- Labour Productivity = Total output / Total labour hours = 2500 units / 3200 hours = 0.78 units/hour
-
Raw Material Productivity:
- Total raw material used per month = 1000 meters of synthetic fur + 250 kg of sponge waste = 1250 units
- Raw Material Productivity = Total output / Total raw material = 2500 units / 1250 units = 2 units/unit
-
Total Productivity:
- Total cost of labour per month = 20 days * Rs.160/day * 20 workers = Rs.64,000
- Total cost of raw material per month = 1000 meters * Rs.100/meter + 250 kg * Rs.50/kg = Rs.100,000 + Rs.12,500 = Rs.112,500
- Total cost of inputs = Total cost of labour + Total cost of raw material = Rs.64,000 + Rs.112,500 = Rs.176,500
- Total revenue from output = 2500 units * Rs.110/unit = Rs.275,000
- Total Productivity = Total output revenue / Total input cost = Rs.275,000 / Rs.176,500 = 1.56
So, the labour productivity of the firm is 0.78 units/hour, the raw material productivity is 2 units/unit, and the total productivity is 1.56.
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