A team of three laborers in Mongolia makes rugs by hand for export to the United States. The team makes 12 rugs per year working 14 hours a day, six days a week, 50 weeks a year. Each laborer is paid a wage equivalent of $1.10 per day.
The materials for each rug cost $50, and the company that sells the rugs has fixed costs of $10,000 per year for things such as energy, rent, and administrative and shipping costs.
Each rug sold for $2000 in the United States.
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Total Labor Cost
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Total Materials Cost
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Fixed Costs
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Total Revenue
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Profit
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If a team of three workers, each making the U.S. federal minimum wage, produced these 12 rugs, what would the total labor cost be? Don't forget that these workers would be working overtime.