Engenuity stated:
1. Option A is unsuitable since the monthly installments are too steep.
2. Option B is unfavorable because it demands a large initial payment and has mileage limits that could pose issues.
3. Option C fits my budget best and offers full car ownership once the loan is fully paid off.
Answer:
Option (E) is the correct answer.
Explanation:
Labor productivity will increase by 50%.
Currently, productivity is at 5000 pairs per worker; with the productivity boost, it will rise to:
= 5,000 × (1 + 50%)
= 7,500.
Total annual pay stands at $40,000.
Cost per unit with higher productivity:
= Total pay ÷ New productivity level
= 40,000 ÷ 7,500
=
$5.33.
Thus, labor costs per unit produced will decrease from $8.00 to $5.33 for a facility in North America.
