Problem 2-21 A retail store had sales of $45,800 in April and $54,850 in May. Th

Question

Problem 2-21

A retail store had sales of $45,800 in April and $54,850 in May. The store employs eight full-time workers who work a 40-hour week. In April the store also had seven part-time workers at 12 hours per week, and in May the store had eight part-timers at 17 hours per week (assume four weeks in each month).

Using sales dollars as the measure of output, what is the percentage change in productivity (dollars output per labor hour) from April to May? (Round your intermediate calculations and final answer to 2 decimal places.)

A retail store had sales of $45,800 in April and $54,850 in May. The store employs eight full-time workers who work a 40-hour week. In April the store also had seven part-time workers at 12 hours per week, and in May the store had eight part-timers at 17 hours per week (assume four weeks in each month).

Explanation / Answer

a) April -

total labour hours = full time hours + part time hours

= (8*40 + 7*12) * 4 = 1616

Therefore productivity = sales/labour hours =45800 / 1616

= 28.34 dollars output per labour hour

b) May

total labour hours = full time hours + part time hours

= (8*40 + 8*17) * 4 = 1824

Therefore productivity = sales/labour hours = 54850/1824

= 30.07 dollars output per labour hour

Percentage change in productivity = (30.07 - 28.34)/ 28.34 = 6.10 %

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