Final answer:
KPIs like Average customer spending, number of new customers, and employee turnover rates are crucial for businesses to assess their performance. Productivity can be measured by profits, analyzing cost breakdowns, and determining optimal production points.
Step-by-step explanation:
Key performance indicators (KPIs) are metrics used to evaluate the success of an organization or a particular activity in which it engages. Examples of KPIs include Average customer spending, the number of new customers, and turnover rates of employees. These indicators help businesses to measure growth, profitability, and efficiency, among other things. However, when it comes to measuring productivity, there are several methods other than just looking at the amount produced per hour of work.
Productivity can also be measured by analyzing the profits a company generates. Doing this involves comparing total revenue with total cost to identify profitability. Additionally, businesses can look at the average cost curve to pinpoint profits and losses, determine the shutdown point, and figure out the price at which they should continue producing in the short run.
Besides, breaking down total costs into fixed cost, marginal cost, average total cost, and average variable cost provides various insights that can also help in assessing productivity. These alternative measures of costs offer a more nuanced understanding of how efficiently a company is operating.