Answer:
a. Which store is most productive?
b. Performance Sails is not sure it can keep all four stores open. Based on productivity, which store would you close?
What other factors should be considered?
- Total volume sales could also be a factor to consider, except that in this case, Alameda store sells the least amount per month.
c. What would Alameda’s multi-factor productivity be if the monthly sales could be increased to $24,000 (please make sure to identify which costs are variable and fixed and adjust the variable cost proportional to the sales increase)?
- total costs = (120 x $6.50) + $1,500 = $2,280
- multi-factor productivity = $24,000 / $2,280 = 10.53 (still the lowest, the problem is that the rent is too high, labor productivity is not a problem)
Step-by-step explanation:
Sausalito Alameda Embarcadero Oakland
Monthly Sales $40,000 $12,000 $60,000 $25,000
Labor hours 250 60 500 200
Labor cost/hr $6.75 $6.50 $6.00 $5.50
Total labor $1,687.50 $390 $3,000 $1,100
Rent (month) $1,900 $1,500 $2,150 $900
Total cost $3,587.50 $1,890 $5,150 $2,000
Multi-factor 11.15 6.35 11.65 12.5
productivity