Our examples in the chapter have focused on manufacturing, where the output is units of product and the inputs are manufacturing activities or costs. The concept of productivity can be applied in a variety of settings, wherever there are inputs and outputs. For example, consider LandscapeCity, a landscape design company that specializes in small landscape projects for people living in cities. Amanda Caldwell, the assistant manager, is in the process of trying to determine if productivity has been improving since she was hired 6 months ago. Because it is a design firm, labor is the only significant expense, but Amanda is unsure if the number of projects or the dollar of sales volume should be used when computing productivity. She has collected these data for sales and labor expenses for the past 6 months:

Required

Carry all computations to 4 digits after the decimal point.

1. Calculate the productivity for each month and the change in productivity from month to month using number of projects as the measure of output.

2. Calculate the productivity for each month and the change in productivity from month to month using sales dollars as the measure of output.

3. Which of these measures of productivity is Amanda likely to prefer and why?

Transcribed Image Text:

Labor Expense Month Number of Projects Sales Dollars $16,470 $20,090 34 40 2 19,200 21,900 50 3 19,392 28,780 4 13,194 13 18,560 13,926 18 21,680 20,592 50 21,520