Question

Gallo Cork Factory

Number of Workers	Number of Machines	Output (corks   produced per hour)	Marginal   Product of Labor	Cost of   Workers	Cost of   Machines	Total Cost
1	2	5
2	2	10
3	2	20
4	2	35
5	2	55
6	2	70
7	2	80

 

 

1.     Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. If Gallo's produces at a rate of 70 corks per hour and operates 8 hours per day, what is Gallo’s total labor cost per day?

a.	$72
b.	$112
c.	$576
d.	$616

 

2.     Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. What is the total daily cost of producing at a rate of 55 units per hour if Gallo’s operates 8 hours per day?

a.	$480
b.	$576
c.	$520
d.	$616

 

 

3.     Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. Assume the number of machines does not change. If Gallo's produces at a rate of 78 corks per hour, what is the total machine cost per day?

a.	$20
b.	$40
c.	$240
d.	We are unable   to determine total machine costs from the information given.

 

4.     Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. If Gallo's produces at a rate of 35 corks per hour, what is the total labor cost per hour?

a.	$40
b.	$48
c.	$384
d.	$424

 

 

5.     Refer to Table 13-4. Assume Gallo's currently employs 5 workers. What is the marginal product of labor when Gallo's adds a 6th worker?

a.	5 corks per   hour
b.	15 corks per hour
c.	25 corks per   hour
d.	70 corks per   hour

 

 

Answer 1

(1) Option (c)

When output = 70, Number of workers = 6

Total labor cost = Number of workers x Number of hours per day x $12 = 6 x 8 x $12 = $576

(2) Option (c)

When output = 55, Number of workers = 5

Total labor cost = 5 x 8 x $12 = $480

Cost of machines = 2 x $20 = $40

Total cost ($) = Total labor cost + Cost of machines = 480 + 40 = 520

(3) Option (b)

Total machine cost = Number of machines x $20 = 2 x $20 = $40 (This is the fixed cost)

(4) Option (c)

When output = 35, Number of workers = 4

Total labor cost = 4 x 8 x $12 = $384

NOTE: As HOMEWORKLIB Answering guidelines, first 4 questions are answered.