Various financial data for 2007 and 2008 follow. Calculate thetotal productivity
ID: 2661556 • Letter: V
Question
Various financial data for 2007 and 2008 follow. Calculate thetotal productivity measure and the partial measures for labor,capital and raw materials for this company for both years. What dothese measures tell you about this company?2007 2008
Output Sales $200,000 $220,000
Input Labor 30,000 40,000
Rawmaterial 35,000 45,000
Energy 5,000 6,000
Capital 50,000 50,000
Other 2,000 3,000
Explanation / Answer
2007 Total productivity: 200000 / (30000 + 35000 + 5000 + 50000 + 2000) = 1.639 Labor productivity: 200000 / 30000 = 6.667 Capital productivity: 200000 / 50000 = 4 Raw materials productivity: 200000 / 35000 = 5.714 2008 Total productivity: 220000 / (40000 + 45000 + 6000 + 50000 + 3000) = 1.528 Labor productivity: 220000 / 40000 = 5.5 Capital productivity: 220000 / 50000 = 4.4 Raw materials productivity: 220000 / 45000 = 4.889 According to these measures, the company's overall productivityactually decreased from 2007 to 2008. While producing more output,the company also utilized much more inputs. The only partialproductivity that improved is capital productivity, since the sameamount of capital in 2008 resulted in more output. Laborproductivity and raw materials productivity decreased.
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