1. A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results:

                                                                U.S.                        LDC

Sales (units) 100,000                 20,000

Labor (hours) 20,000 15,000

Raw materials (currency) $20,000 FC 20,000

Capital equipment (hours) 60,000 5,000   

a) Calculate partial labor and capital productivity ?gures for the parent and subsidiary. Do the results seem confusing?

b) Compute the multifactor productivity ?gures for labor and capital together. Do the results make more sense?

c) Calculate raw material productivity ?gures (units/$ where $1   5   FC 10). Explain why these ?gures might be greater in the subsidiary.