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?

Question

Dakota Garner

Business

14 October, 14:59

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?

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Answers (1)

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Tobias Burton · Answer 1

-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%