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Using the data in Extract F, calculate the monthly labour cost per car - Edexcel - A-Level Business - Question 2 - 2018 - Paper 2

Question 2

Using the data in Extract F, calculate the monthly labour cost per car. You are advised to show your working.

Worked Solution & Example Answer:Using the data in Extract F, calculate the monthly labour cost per car - Edexcel - A-Level Business - Question 2 - 2018 - Paper 2

Step 1

Calculate Monthly Labour Productivity

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Answer

The monthly labour productivity can be calculated by dividing the monthly output by the number of production workers.

$\text{Monthly Labour Productivity} = \frac{\text{Monthly Output}}{\text{Number of Workers}} = \frac{20,000}{400} = 50 \text{ cars per worker}$

Step 2

Calculate Labour Cost per Car

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Answer

Next, we find the total monthly labour cost. The total monthly labour cost is calculated by multiplying the number of workers by the labour cost per worker.

$\text{Total Monthly Labour Cost} = 400 \times 2,000 = 800,000 \text{ pounds}$

Then, we divide the total monthly labour cost by the monthly output to find the labour cost per car.

$\text{Labour Cost per Car} = \frac{\text{Total Monthly Labour Cost}}{\text{Monthly Output}} = \frac{800,000}{20,000} = 40 \text{ pounds}$

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