A furniture manufacturing company working on a 40 hour per week basis makes 100 chairs. The sales price is €70 each, and the company has the following costs:• Direct materials €700• Direct labor €300• Overhead €500a) Calculate the productivity of the company.b) What will be the new productivity if the company decides tomake 135 chairs per week?c) If the company decides to improve productivity throughmaterials costs reduction only, how much these costs mustbe reduced in order to achieve a 10 percent increase in totalproductivity?d) If the company repeats the same exercise as in (c) above, butthrough labour costs reduction, how much these costs mustbe reduced in order to achieve a 10 percent increase in totalproductivity?
A furniture manufacturing company working on a 40 hour per week basis makes 100 chairs. The sales price is €70 each, and the company has the following costs:
• Direct materials €700
• Direct labor €300
• Overhead €500
a) Calculate the productivity of the company.
b) What will be the new productivity if the company decides to
make 135 chairs per week?
c) If the company decides to improve productivity through
materials costs reduction only, how much these costs must
be reduced in order to achieve a 10 percent increase in total
productivity?
d) If the company repeats the same exercise as in (c) above, but
through labour costs reduction, how much these costs must
be reduced in order to achieve a 10 percent increase in total
productivity?
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