A hamburger factory produces 40,000 hamburgers each week. The equipment used costs $5,000 and will remain productive for 4 years. The labor cost per year is $9,500. Solution Productivity = total units produced divided by the total labor cost plus total equipment cost = 40,000(52)(3)/[9500(3) + 5000] = 186.26 hamburgers/dollar We have the option of $10,000 equipment, with an operating life of 5 years. It would reduce labor costs to $6,000 per year. Should we consider purchasing this equipment (using productivity arguments alone)? Explain your answer in detail. For the expensive machine, productivity = 40,000(52)(5)/[6000(5) + 10,000] = 260 units of output/dollar input. Because the productivity of the expensive machine is higher, it would be a good investment. .