Problem:
The CEO has asked you to evaluate the firm's productivity by comparing performance a month from last year and equivalent month this year. The following data are available:
| |
Last Year
|
This Year
|
|
Output
|
12,500 units
|
14,100 units
|
|
Labor (hours)
|
11,000
|
11,200
|
|
Utilities (BTUs)
|
7,800
|
9,250
|
|
Capital
|
$85,000
|
$87,000
|
The CEO determines his costs to be as follows:
- Labor $20 per hour
- Utilities $1.50 per BTU
- Capital 15% per month of investment.
Required:
Question 1) Show the productivity change, for one month last year versus one month this year, on a multifactor basis.
Solve the given numerical problem and illustrate step by step calculation.