A retail store had sales of $45000 in April and $56000 in May. The store employs eight full time workers who work 40 hours per week. In April the store also had seven part time workers at 10 hours per week, and in may the store had 9 part time workers at 15 hours per week. Using sales dollars as the measure for output, what is the percentage of change in productivity from April to May?

A change in labour productivity reflects an output change that cannot be accounted for by a change in the number of hours worked. The development of technology over time might lead to an increase in output per hour enhanced employee skills.

Step by step solution

Step 1: Productivity for month of April

We must first determine the number of man hours worked in April in order to compute the percentage change in productivity:

8 employs worked for 40 hours along with 7 employs worked for 10 hours in a week( total 4 weeks in April).

Input of April is,

= 8×40 + 7×10×4

= 1560 hours

To determine the productivity in April, divide the total sales by the number of man hours:

= 45000/1560

= 28.846

Step 2: Productivity for month of May

8 employs worked for 40 hours along with 9 employs worked for 15 hours in a week( total 4 weeks in April).

Input of May is,

= 8×40 + 9×15×4

= 1820 hours

To determine the productivity in April, divide the total sales by the number of man hours:

= 56000/1820

= 30.769

Step 3: Calculate the total productivity

Finding the difference between productivity in each month and dividing by April's productivity percentage yields the percent change in productivity:

= [tex]\frac{30769-28.846}{28.846}[/tex]×[tex]100[/tex]

= 6.66 %

Therefore, the productivity from April to May increased by 6.66%.

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