A process is replicated in another country where wages are 50 percent lower. Staffing and processing times are identical. What would be the effect on the costs of direct labor?A. Costs of direct labor would be 50 percent lower.B. Costs of direct labor would be the same. C. Costs of direct labor would be 50 percent higher. D. Cannot determine from the given information.

Based on the information provided within the question it can be said that in this scenario the cost of direct labor would be about 50% lower than in the current country of production. That is because the average amount that the workers get paid in that country are 50% lower, therefore the company will be paying 50% less for labor in that country as opposed to where they are now.

chilljain33 chilljain33 · Answer 2 · 2022-01-03T07:56:49+01:00

The correct statement will be that such a replicated process will result in the costs of direct labor for the country will be 50% lower as compared to previous situation . So, the correct option is A.

Direct labor costs refer to such costs which are directly associated for obtaining the labor services of such labor in the country generally operating at a large scale.

If the direct costs of the company remained the same they would effectively be 50% higher as the other costs are also affected. 50% higher wages would mean direct labor costs to be doubled.

It has been provided that the staffing and processing of both the countries are identical in their nature, but only the wages in such country is 50% lower which will ultimately result in lower costs.

Direct labor cost will be 50% lower as the government of such country has accepted the wage rate as 50% lower where other things remain constant and will be profitable for the economy.

Hence, the correct option is A that the direct labor cost will be 50% lower in case of a country which has everything else identical but has less wage rate for labors.

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