Question

Martin Manufacturing has implemented several programs to improve its productivity. They have asked you to evaluate the firm's productivity by comparing this year's performance with last year's. The following data are available:
Last Year

This Year

Output

10,500 units

12,100 units

Labor Hours

12,000

13,200

Utilities

$7,600

$8,250

Capital

$83,000

$88,000

Has Martin Manufacturing improved its productivity during the past year?

Answer 1

Answer:

Yes.

Explanation:

In the last year,

Output per unit of labor hours:

= Output ÷ Labor Hours

= 10,500 units ÷ 12,000

= 0.875

Output per utility consumed:

=  Output ÷ Utilities

= 10,500 units ÷ $7600

= 1.3815

Output per unit of capital:

= Output ÷ capital

= 10,500 ÷ 83,000

= 0.1265

In this year,

Output per unit of labor hours:

= Output ÷ Labor Hours

= 12,100 units ÷ 13,200

= 0.917

Output per utility consumed:

=  Output ÷ Utilities

= 12,100 units ÷ $8,250

= 1.466

Output per unit of capital:

= Output ÷ capital

= 12,100 units ÷ $88,000

= 0.1375

Percentage change in Output per unit of labor hours:

= (0.917 - 0.875) ÷ 0.875

= 4.8%

Percentage change in Output per utility consumed:

= (1.466 - 1.3815) ÷ 1.3815

= 6.11%

Percentage change in Output per unit of capital:

= (0.1375 - 0.1265) ÷ 0.1265

= 8.69%

Therefore, there is a positive percentage increase in all the computations of productivity which shows that there is an improvement in the productivity this year.