4/11/2023 0 Comments Marginal product formula![]() ![]() ![]() This is a vital concept to the company’s managers as it shall measure the optimal amount of labor they should employ and maximize their profits and productivity. You are required to assess the situation and advise the management. The management is not sure whether the production needs to be increased to boost profits or a cut is required in the cost. Therefore, the monthly production and the required labor are below for the past six months. The allowances are sub-divided broadly into two categories- direct labor involved in the manufacturing process and indirect labor pertaining to all other processes. On analyzing its cost, it was noticed that the labor cost The Labor Cost Cost of labor is the remuneration paid in the form of wages and salaries to the employees. The management has asked the production department to look into the same. Recently, when the company’s management went to a profit margin of the product and realized that the product had suffered declining profits. has a manufacturing product called “DFGH,” which requires a lot of labor effort. Therefore, the MPL of the product for this company is 9. Therefore, the calculation of the marginal product of labor is as follows,
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