In 2013, Gibison's Auto Repair invested in a computer diagnostic machine that reads codes on a car's
Question:
In 2013, Gibison's Auto Repair invested in a computer diagnostic machine that reads codes on a car's computer, thereby shortening the time it takes to determine what is wrong with a car. Consider the figures below:
Year Sales ($000s) Labor costs ($000s) Machine costs ($000s)
2010, $2,468 ,$987, $0
2011, $2,838, $1,192, $0
2012, $3,085, $1,172, $0
2013 $3,702 $1,074 $150
2014, $4,072, $1,140, $150
2015, $4,319, $1,166, $150
a. Calculate the labor productivity for each of the six years. How much has labor productivity improved since the diagnostic machine was brought in?
b. Calculate the multi-factor productivity score for each year, where the "input" is the total amount spent on labor and the diagnostic machine.
Next, calculate the average multi-factor productivity score for years 2010 - 2012, and years 2013 - 2015. According to the results, was it worthwhile for Gibson to invest in the diagnostic machine? Why or why not?
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-1259692406
18th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello