Lander Metals Inc.manufactures automobile spare parts for car manufacturers.Management is attempting to search for ways to reduce manufacturing labor costs and has received a proposal from a consulting company to rearrange the production floor next year.Using the information below regarding current operations and the new proposal,which of the following decisions should management accept? $\begin{array}{lrr}&\text { Current }&\text { Proposed }\
\text { Required machine operators } & 16 & 12 \
\text { Materials-handling workers } & 3.00 & 3.00 \
\text { Employee average pay } & \$ 15 \text { per hour } & \$ 18 \text { per hour } \
\text { Hours Worked per employee } & 3,400 & 3,150
\end{array}$
A) Do not change the production floor.
B) Rearrange the production floor.
C) Either, because it makes no difference to the employees.
D) It doesn't matter because the costs incurred will remain the same.

Question

Quizplus · Accepted Answer

Rearranging the production floor reduces the number of machine operators from 16 to 12, which decreases labor costs despite the increase in average pay per hour and slightly fewer hours worked per employee.

Lander Metals Inc A) Do Not Change the Production Floor