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: Number of Projects Month 49 ܢܙ ܢܬ ܚ Labor Expense $23,740 33,600 20,892 14,694 15,426 22,092 70 52 13 Sales Dollars $21,590 23,400 30,280 20,060 23,180 23,020 ܠ ܗ 18 52 ܗ 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. 2. Calculate the productivity for each month and the change in productivity from month to month using sales dollars as the measure of output.

Answer 1

Required 1.

Month	Labour expense(1)	no. Of projects(2)	Productivity(3=2/1)	Monthly change
1	$23,740	49	0.00206	-
2	$33,600	70	0.00208	0.0002
3	$20,892	52	0.00248	0.0004
4	$14,694	13	0.00088	-0.0016
5	$15,426	18	0.00118	0.0003
6	$22,092	52	0.00235	0.0011

Required 2.

Month	Labour expense(1)	sales dollars(2)	Productivity(3=2/1)	Monthly change
1	$23,740	$21,590	0.9094	-
2	$33,600	$23,400	0.6964	-0.213
3	$20,892	$30,280	1.4493	0.7529
4	$14,694	$20,060	1.3651	-0.0842
5	$15,426	$23,180	1.5026	0.1375
6	$22,092	$23,020	1.0420	-0.4606

_____×_____

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