Scenario 1. 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.
Total Labor Cost
Total Materials
Cost
Fixed Costs
Total Revenue
Profit
990
10,000
24,000
12,410
(3 points)
(1 point)
(1 point)
(2 points)
(3 points)
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. (5
points)