PE 12-7B Revenue per employee

TechSystems, Architects earned $3,600,000 during 2012 using 20 employees. During 2013, the firm reduced revenues to $3,200,000 and reduced the staff to 16 employees.

a. Determine the revenue per employee for each year.
b. Interpret the results.

Answer:
a.
2012: $3,600,000/20 employees
= $180,000 per employee

2013: $3,200,000/16 employees
= $200,000 per employee


b. TechSystems, Architects reduced revenues by $400,000 ($3,600,000 – $3,200,000), or 11.1% ($400,000/$3,600,000). The number of employees declined by 4, or 20% (4/20). The decline in revenue was less than the decline in number of employees; thus, the revenue per employee improved between the two years. The firm is more efficient in generating revenues from its staff resources between the two years.  


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