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 2 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 calculated by dividing total revenue by total labor hours.

For April:
Total labor hours = (6 workers * 40 hours/week * 4 weeks) + (4 part-time workers * 25 hours/week * 4 weeks)
Total labor hours = 960 + 400 = 1360 hours
Labor productivity = $60,000 / 1360 hours = $44.12/hour

For May:
Total labor hours = (6 workers * 40 hours/week * 4 weeks) + (2 part-time workers * 10 hours/week * 4 weeks)
Total labor hours = 960 + 80 = 1040 hours
Labor productivity = $50,000 / 1040 hours = $48.08/hour

The percentage change in labor productivity is calculated as follows:
((New Value - Old Value) / Old Value) * 100%
= (($48.08 - $44.12) / $44.12) * 100%
= $3.96 / $44.12 * 100%
= 8.97%

Therefore, the correct answer is C.

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