Question

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?

Answer 1

Answer:

-2.3%

Explanation:

Labor productivity basically measures how much output does each unit of labor generates.

• labor productivity = total output / total labor hours

total labor used during April = (6 employees x 40 hours) + (4 employees x 25 hours) = 340 labor hours. Labor productivity in April = total output / total labor hours = $60,000 / 340 labor hours = $176.47 per labor hour

total labor used during May = (6 employees x 40 hours) + (2 employees x 25 hours) = 290 labor hours. Labor productivity in May = total output / total labor hours = $50,000 / 290 labor hours = $172.41 per labor hour

the percentage change in labor productivity = ($172.41 - $176.47) / $176.47 = -2.3%