Question

In Myanmar?, six ?laborers, each making the equivalent of $ 3.00 per? day, can produce 38...

In Myanmar?, six ?laborers, each making the equivalent of $ 3.00 per? day, can produce 38 units per day. In China?, nine ?laborers, each making the equivalent of $ 2.00 per? day, can produce 45 units. In Billings comma Montana?, four ?laborers, each making $ 57.00 per? day, can make 100 units. Shipping cost from Myanmar to? Denver, Colorado, the final? destination, is $ 1.50 per unit. Shipping cost from China to Denver is $ 1.20 per? unit, while the shipping cost from Billings comma Montana to Denver is $ 0.30 per unit. Based on total costs? (labor and? transportation) per? unit, the most economical location to produce the item is ? Billings, Montana Myanmar China ?, with a total cost? (labor and? transportation) per unit of ?$ nothing. ?(Enter your response rounded to two decimal? places.)

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Answer #1

Labour cost per unit at any location

= ( Cost per labourer per day x Number of labourer) / Units produced

Therefore , labour cost per unit at Myanmar = $3 x 6 / 38 = $0.473 per unit

Labour cost per unit per unit at China = $ 2 x 9 / 45 = $0.8 per unit

Labour cost per unit at Billing , Montana = $57 x 4/100 = $2.28 per unit

Total cost per unit = Labour cost per unit + transportation cost per unit

Total cost per unit for shipment ex Myanmar = $0.473 + $1.5 = $1.973

Total cost per unit for shipment ex China = $0.80 + $1.20 = $ 2

Total cost per unit for shipment ex Montana = $2.28 + $0.3 = $2.58

Since choosing Myanmar results in lowest cost option, it is the most economical location to produce the item at total unit cost of $ 1.973 ( $1.97 rounded to 2 decimal places )

MOST ECONOMICAL LOCATION TO PRODUCE THE ITEM IS MYANMAR WITH TOTAL COST OF $1.97 PER UNIT
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