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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

To calculate the monthly labour productivity, divide the monthly output by the number of production workers.

Using the data provided:

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

Step 2

Calculate Total Monthly Labour Cost

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Answer

Next, calculate the total monthly labour cost by multiplying the number of production workers by the labour cost per worker per month.

Using the given information:

$\text{Total Monthly Labour Cost} = \text{Number of Workers} \times \text{Labour Cost per Worker} = 400 \times £2,000 = £800,000$

Step 3

Calculate Labour Cost per Car

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Answer

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

Using the earlier calculations:

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

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