One measure of productivity is the average sales dollars generated by each employee. For example, in a company with total revenue of $1,480,000 and 20 employees, sales per employee are $74,000, calculated as follows: 

Calculating this measure from period to period or one part of a company to another can identify productivity changes. If sales per employee change greatly, the owner needs to learn why.

INSTRUCTIONS 

Answer these questions using Roadrunner’s income statement on page 222. 

1. If Roadrunner has two employees including the owner, what is the revenue per employee?

2. Suppose Roadrunner hires two more delivery people. The next month’s revenue increases to $5,400. How has the productivity per employee changed?

Transcribed Image Text:

Total Revenue Number of Employees = Sales per Employee