Question

19. Various financial data for the past two years follow. Calculate the total uctivity measure and the partial measures for labor, capital, and raw materials for this company for both years. What do these measures tell you about this company? LAST YEAR THIS YEAR Output: Sales Input: Labor Raw materials Energy Capital Other $200,000 30,000 35,000 5,000 50,000 2,000 $220,000 40,000 45,000 6,000 50,000 3,000 1. Calculate the total productivity measure and the partial measures for labor, capital and raw materials for this company for both years. 2. Calculate and state the percent increase or decrease in productivity from last year to this year for each and every individual partial productivity measure. 3. Calculate and state the percent increase or decrease from last year to this year with respect to the total productivity (also referred to as multifactor productivity).

Answer 1

	Last Year	This Year
Sales	$200,000	$220,000
Labor	$30,000	$40,000
Raw materials	$35,000	$45,000
Energy	$5,000	$6,000
Capital	$50,000	$50,000
Other	$2,000	$3,000
	Last Year	This Year	% increase (decrease)
Labor productivity	6.67	5.50	-17.50%
Material productivity	5.71	4.89	-14.44%
Energy productivity	40.00	36.67	-8.33%
Capital productivity	4.00	4.40	10.00%
Multifactor productivity	1.64	1.53	-6.81%

Calculations:

This Year Sales Labor Raw materials Energy Capital Other 200000 30000 35000 5000 50000 2000 Last Year 220000 40000 45000 6000 50000 3000 Labor productivity Material productivity Energy productivity Capital productivity =$C$3/04 =$C$3/05 =$C$3/C6 =$C$3/07 Last Year =$D$3/04 =$D$3/D5 =$D$3/D6 =$D$3/07 This Year % increase (decrease) =(D11-C11)/C11 =(D12-C12)/012 =(D13-C13)/C13 =(D14-C14)/C14 13 14 15 16 Multifactor productivity =$C$3/SUM(C4:08) =$D$3/SUM(D4:08) =(D16-C16)/C16

1.

	Last Year	This Year
Labor productivity	6.67	5.50
Material productivity	5.71	4.89
Energy productivity	40.00	36.67
Capital productivity	4.00	4.40
Multifactor productivity	1.64	1.53

2.

	Last Year	This Year	% increase (decrease)
Labor productivity	6.67	5.50	-17.50%
Material productivity	5.71	4.89	-14.44%
Energy productivity	40.00	36.67	-8.33%
Capital productivity	4.00	4.40	10.00%

So, only capital productivity has an increase in percentage. Rest all factors show a reduction in productivity.

3.

	Last Year	This Year	% increase (decrease)
Multifactor productivity	1.64	1.53	-6.81%

The total productivity has also reduced by 6.81%