Larry's Auto Body Repair Shop had revenues that averaged $60,000 per week in April and $50,000 per week in May.During both months, the shop employed six full-time (40 hours/week) workers.In April the firm also had four part-time workers working 25 hours per week, but in May there were only two part-time workers and they only worked 10 hours per week.What is the percentage change in labor productivity from April to May for Larry's Auto Body Repair?

Question

Quizplus · Accepted Answer

Labor productivity is output (revenue) divided by hours of labor input.For April, revenue was $60,000 and labor hours were 4 x [(40 x 6) + (25 x 4)].This is 60,000/1,360 or 44.12 dollars per hour of labor.For May, revenue was $50,000 and labor hours were 4 x [(40 x 6) + (10 x 2)] This is 50,000/1,040 or 48.07 dollars per hour of labor a difference of $3.95 per hour.The percentage change in productivity between April and May, then, is 3.95/44.12 = 0.0895 x 100 = 8.95%.(Note: this analysis assumes four weeks in each month and equal productivity for each hour worked.)

Larry's Auto Body Repair Shop Had Revenues That Averaged $60,000