Question

A land title search office has a staff of three, each working eight hours per day (for a total payroll cost of $480/day) and overhead costs of $300 per day. This office processed an average of seven titles each day. The office recently purchased a computerized title-search system that will allow the processing of an average of 12 titles per day. Although the staff, work hours, and pay will be the same, the overhead costs are now $600 per day. Calculate the labour productivity in the old and the new systems. How much (in percentage) has the labour productivity grown?

Answer 1

Well, your costs per title have decreased from:

$780/7 = $111.43
to:
$1080/12 = $90

That represents a decrease in costs of almost 20%.

Then. taking the change in titles processed per dollar of cost (the reciprocals of previous calculations), means that total productivity has increased by around 23.8%. Are you calculating labor productivity as including overhead? Because then the answer is 23.8%