Louis Labourer works for $9.50 per hour. How many hours does Louis need to work to pay his rent of $1,800 per month?
Each product Louis produces retails for $15. Louis can produce 100 of these products every 30 minutes. What is the total value of product that Louis can produce in an 8 hour work period?
“Surplus value” is the difference between the retail value of a product and the wages paid to those who produce it. Calculate the surplus value generated by Louis in an 8 hour work period.
Cecil CEO has a salary of $55 million per year. How many hours does Cecil need to work to pay Louis’ rent of $1,800 per month?
Assuming each of the labourers employed by Cecil produce the same surplus value as Louis Labourer, how many workers does Cecil exploit to pay his decadent salary?
I’m more interested in what product Louis is producing at a rate of 200 units per hour that retails for $15 each.
Is it drugs? Gotta be drugs.
Also, producing 200 an hour of anything doesn’t sound like something that can be accomplished without the help of a machine, in which case, how much does that machine cost and who paid for it? How much electricity does it use, and what’s the cost of maintenance and inspection?
What sort of raw material does the product require and at what cost? How much does it cost to ship it to the distributor, and what’s the wholesale price for the product? Is there any marketing involved or are we talking illegal drugs, in which case, what bribes need to be paid to ensure safe delivery?
If you’re gonna do the math, at least do it all the way.
If you’re gonna do the math, at least do it all the way.
You’re right, and investors agree! That’s why publicly traded companies do this math and publicly list it in what are known as “income statements”.
What sort of raw material does the product require and at what cost? How much does it cost to ship it to the distributor, and what’s the wholesale price for the product? Is there any marketing involved
Income statements split expenses generally into “direct” and “indirect” costs. Raw materials, shipping, machines, electricity, wages of workers, etc, those all go into “cost of goods sold” or “cost of revenue”. The bulk of cost of revenue is employee wages. Machines are expensive but there’s a reason why the industrial revolution took place and why jobs today continue to be automated. Machines are far cheaper than humans.
Marketing is an indirect cost, so it goes into “Sales, General and Admistrative”. There can also be a line for “Research and Development”.
I’m more interested in what product Louis is producing at a rate of 200 units per hour that retails for $15 each. Is it drugs? Gotta be drugs.
This makes me laugh. I work in manufacturing. The product produced is ubiquitous in construction but can be bought by consumers at a hardware store. You’ve probably bought some yourself, for $15 each. The machine I work on outputs about 100 units per minute. It’s runs 24 hours a day, 7 days a week. In my 8 hour shift it produces 48,000 units. I say “work on” the machine, but really the machine does most of the work. If the bosses could replace me, I’m sure they would. Unlike Louis, though, I’m unionized and make $30/hr. I can’t complain when that’s way higher than average for a job that’s mostly watching a machine run.
Even at this decent wage, the company I work for is still making billions in profit. While the product retails for $15 each, it certainly doesn’t cost anywhere near that to produce. That’s just what people are willing to pay for it.
Louis Labourer works for $9.50 per hour. How many hours does Louis need to work to pay his rent of $1,800 per month?
Each product Louis produces retails for $15. Louis can produce 100 of these products every 30 minutes. What is the total value of product that Louis can produce in an 8 hour work period?
“Surplus value” is the difference between the retail value of a product and the wages paid to those who produce it. Calculate the surplus value generated by Louis in an 8 hour work period.
Cecil CEO has a salary of $55 million per year. How many hours does Cecil need to work to pay Louis’ rent of $1,800 per month?
Assuming each of the labourers employed by Cecil produce the same surplus value as Louis Labourer, how many workers does Cecil exploit to pay his decadent salary?
I’m more interested in what product Louis is producing at a rate of 200 units per hour that retails for $15 each.
Is it drugs? Gotta be drugs.
Also, producing 200 an hour of anything doesn’t sound like something that can be accomplished without the help of a machine, in which case, how much does that machine cost and who paid for it? How much electricity does it use, and what’s the cost of maintenance and inspection?
What sort of raw material does the product require and at what cost? How much does it cost to ship it to the distributor, and what’s the wholesale price for the product? Is there any marketing involved or are we talking illegal drugs, in which case, what bribes need to be paid to ensure safe delivery?
If you’re gonna do the math, at least do it all the way.
You’re right, and investors agree! That’s why publicly traded companies do this math and publicly list it in what are known as “income statements”.
Income statements split expenses generally into “direct” and “indirect” costs. Raw materials, shipping, machines, electricity, wages of workers, etc, those all go into “cost of goods sold” or “cost of revenue”. The bulk of cost of revenue is employee wages. Machines are expensive but there’s a reason why the industrial revolution took place and why jobs today continue to be automated. Machines are far cheaper than humans.
Marketing is an indirect cost, so it goes into “Sales, General and Admistrative”. There can also be a line for “Research and Development”.
This makes me laugh. I work in manufacturing. The product produced is ubiquitous in construction but can be bought by consumers at a hardware store. You’ve probably bought some yourself, for $15 each. The machine I work on outputs about 100 units per minute. It’s runs 24 hours a day, 7 days a week. In my 8 hour shift it produces 48,000 units. I say “work on” the machine, but really the machine does most of the work. If the bosses could replace me, I’m sure they would. Unlike Louis, though, I’m unionized and make $30/hr. I can’t complain when that’s way higher than average for a job that’s mostly watching a machine run.
Even at this decent wage, the company I work for is still making billions in profit. While the product retails for $15 each, it certainly doesn’t cost anywhere near that to produce. That’s just what people are willing to pay for it.