If Labor Costs Are 60 Percent of Production Costs,then a 15

Multiple Choice

If labor costs are 60 percent of production costs,then a 15 percent increase in wage rates would increase production costs by:

A) 60 percent.
B) 45 percent.
C) 15 percent.
D) 9 percent.
If total production costs are $100,labor's share is $60.If wages go up 15 percent,the wage bill becomes $60 * 1.15 = $69.Total production costs rise to $109,which is a 9 percent increase.