Labor Cost
Expense of employing workers; wages, benefits, training, administration.
Formula
Labor Cost per Unit = Total Labor Cost ÷ Units Produced
Real World
Nike moved much of its manufacturing to Vietnam and Indonesia where labor costs are significantly lower than in the US, helping keep production costs down while maintaining high retail prices.
Exam Focus
For 'evaluate' questions, weigh labor cost savings against risks like quality control issues and reputational damage.
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