Question

Our examples in the chapter have focused on manufacturing, where the output is units of product and the inputs are manufacturing activities or costs. The concept of productivity can be applied in a variety of settings, wherever there are inputs and outputs. For example, consider LandscapeCity, a landscape design company that specializes in small landscape projects for people living in cities. Amanda Caldwell, the assistant manager, is in the process of trying to determine if productivity has been improving since she was hired 6 months ago. Because it is a design firm, labor is the only significant expense, but Amanda is unsure if the number of projects or the dollar of sales volume should be used when computing productivity. She has collected these data for sales and labor expenses for the past 6 months:

Month	Labor Expense			Number of Projects			Sales Dollars
1	$	26,160			54		$	22,090
2		38,400			80			23,900
3		21,392			50			30,780
4		15,194			13			20,560
5		15,926			18			23,680
6		22,592			50			23,520

Required:

1. Calculate the productivity for each month and the change in productivity from month to month using number of projects as the measure of output. (PLEASE FOLLOW THE FOLLOWING FORMAT)

2. Calculate the productivity for each month and the change in productivity from month to month using sales dollars as the measure of output. (PLEASE FOLLOW THE FOLLOWING FORMAT)

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the productivity for each month and the change in productivity from month to month using number of projects as the measure of output. (Round your answers to 4 decimal places. Negative amounts should be indicated by a minus sign.) Labor Expense 24 Number of Projects Monthly Change Month Productivity 26,160 54 38,400 80 3. 24 21,392 50 4. 24 15,194 13 15,926 18 2$ 22,592 50 Required 1 Required 2 > < Prev 2 of 5 Next >

Answer 1

Required 1

The productivity is calculated using the below formula:

Productivity = Total unit of output/total unit of input

In this example, number of projects are output and labour expenses incurred is input.

Productivity = Number of projects/Labour expenses

The Monthly change is calculated by subtracting productivity of current month from productivity of previous month

For 1st month, Productivity = 54/26,160 = 0.0021

Likewise, please find the below table in above format:

Required 2

Labour expenses No. of projects Productivity Monthly Change 54 Month 26160 1 0.0021 80 0.0000 2 38400 0.0021 21392 50 0.0023 0.0002 4 15194 13 0.0009 -0.0014 15926 18 0.0011 0.0002 22592 0.0011 50 0.0022

In this example, sales dollars is the output

Productivity = Sales dollars/Labour expenses

For 1st month, Productivity = 22,090/26,160 = 0.8444

Likewise, I have calculated for the rest of the months in below table:

Monthly change cannot be calculated for the first month as we do not know the productivity of the previous month.

Productivity Monthly Change Month Labour expenses Sales dollars 22090 26160 0.8444 0.6224 38400 23900 -0.2220 1.4389 3 21392 30780 0.8165 15194 4 20560 1.3532 -0.0857 15926 23680 1.4869 0.1337 22592 23520 1.0411 -0.4458

Monthly change = Productivity of current month - Productivity of previous month

For 2nd month = 0.6224 - 0.8444 = -0.2220