Martin Manufacturing has implemented several programs to improve its productivit

Question

Martin Manufacturing has implemented several programs to improve its productivity. They have asked you to evaluate the firm's productivity by comparing this year's performance with last year's. The following data are available:

Last Year

This Year

Output

10,500 units

12,100 units

Labor Hours

12,000

13,200

Utilities

$7,600

$8,250

Capital

$83,000

$88,000

Has Martin Manufacturing improved its productivity during the past year?

Last Year

This Year

Output

10,500 units

12,100 units

Labor Hours

12,000

13,200

Utilities

$7,600

$8,250

Capital

$83,000

$88,000

Explanation / Answer

Last year

Output per unit of labor hours = 10500/12000 = .875

Output per utility consumed = 10500/7600 = 1.3815

Output per unit of capital = 10500/83000 =.1265

This year

Output per unit of labor hours = 12100/13200 = .917

Output per utility consumed = 12100/8250 = 1.466

Output per unit of capital = 12100 / 88000 = .1375

% change in “Output per unit of labor hours” = (.917 - .875)/.875 = 4.8%

% change in “Output per utility consumed” = (1.466 – 1.3815)/1.3815 = 6.11%

% change in “Output per unit of capital” = (.1375 - .1265)/.1265 = 8.69%

Since there is a positive percentage increase in different types of measurements of productivity in this year’s performance. Thus, productivity has improved upon the last year.

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