HSH is a manufacturer of components for a major automotive producer. In 2012, HSH produced 12,000 units. In 2013, the company produced 14,000 units. HSH estimated that it spent $1.5 million to produce the units in 2012 and $1.7 million to produce the units in 2013. What was HSH's labor productivity growth rate from 2012 to 2013?

Question

Quizplus · Accepted Answer

Labor productivity growth rate = ((Units produced in current year - Units produced in previous year) ÷ Units produced in previous year) × 100%
= ((14,000 - 12,000) ÷ 12,000) × 100%
= 16.67%
Therefore, the labor productivity increased by 16.67% from 2012 to 2013, which is equivalent to 2.9% growth rate (16.67 ÷ 1.15) since the company spent more money to produce the units in 2013. So, the correct answer is D.

HSH Is a Manufacturer of Components for a Major Automotive