If the cost of labor in the United States is five times greater than the cost of labor inAsia, how much would it cost to produce a pair of Nike athletic shoes in the UnitedStates$65 a pair, what would be the percentage difference in profit realized?

Answer 1

If the cost of producing a pair of Nike athletic shoes in the United States is $65, we can calculate the cost of labor as follows:

Cost of labor in the United States = 5X

Cost of labor + other costs = $65

Assuming labor is the only significant cost, we can equate the equation as follows:

5X = $65

Dividing both sides by 5, we get:

X = $13

Therefore, the cost of labor in Asia is $13.

Now, let's calculate the production cost in Asia:

Cost of labor in Asia = X = $13

Other costs (excluding labor) = 0 (since labor is the only significant cost difference mentioned)

Total production cost in Asia = $13

To find the percentage difference in profit realized, we need to consider the selling price and the production cost in both regions.

Selling price of Nike athletic shoes = $65

Profit in the United States:

Profit in the United States = Selling price - Production cost in the United States

Profit in the United States = $65 - $65 = $0

Profit in Asia:

Profit in Asia = Selling price - Production cost in Asia

Profit in Asia = $65 - $13 = $52

Now, let's calculate the percentage difference in profit realized:

Percentage difference in profit = (Profit in Asia - Profit in the United States) / Profit in the United States * 100

Percentage difference in profit = ($52 - $0) / $0 * 100

As the denominator is zero (no profit in the United States), the percentage difference in profit is undefined or infinite.

Therefore, there is an infinite percentage difference in profit realized between producing a pair of Nike athletic shoes in the United States and in Asia.