13. The following data (all in billion S) are the sales and costs (excluding sel
ID: 363297 • Letter: 1
Question
13. The following data (all in billion S) are the sales and costs (excluding selling and general and administrative costs) of McDonalds for company-operated restaurants (i.e., excluding franchise restaurants).13 (L03) a. Calculate the labour productivity (in S sales over S payroll & benefits costs) and its growth over time. Interpret your results. b. Calculate the multifactor productivity (in $ sales over $ all operating costs given) and its growth over time. Interpret your results. Sales Operating costs Food&paper; Payroll&benefits; Occupancy lease, etc) 2007 16.6 5.5 4.3 3.9 2008 16.6 5.9 4.3 3.8 2009 15.5 5.2 4.0 3.5Explanation / Answer
Answer to question a :
Labour productivity in a year = Sales in a year / Payroll and benefits in that year
Therefore ,
Labour productivity during 2007 = 16.6/ 4.3 = 3.860
Labour productivity during 2008 = 16.6/4.3 = 3.860
Labour productivity during 2009 = 15.5/4 = 3.875
Percentage growth over time = ( 3.875 – 3.860)/ 3.86 x 100 = 0.3886 %
Labour productivity remains unchanged for first two years after which it increases in third year
Answer to question b :
Multifactor productivity = Sales/ ( Operating cost + Payroll + Occupancy )
Therefore ,Multifactor productivity for 2007 = 16.6 / ( 5.5 + 4.3 + 3.9) = 16.6/13.7 = 1.211
Multifactor productivity for 2008 = 16.6 / ( 5.9 + 4.3 + 3.8 ) = 16.6/14 = 1.185
Multifactor productivity for 2009 = 15.5 / ( 5.2 + 4 + 3.5) = 15.5 /12.7 = 1.220
Percentage Growth in multifactor productivity over 3 years = ( 1.22 – 1.211) / 1.211 x 100 = 0.743 %
Overall trend of Multifactor productivity is mixed because it is witnessing downward movement during first half and upward movement during 2nd half
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