Refer to the HR Reports in the Inquirer. Through past investments in recruiting
ID: 2753637 • Letter: R
Question
Refer to the HR Reports in the Inquirer. Through past investments in recruiting and training Chester has obtained a productivity index of 109.4%. This means that Chester's labor costs would be increased by 9.4% if it did not have these productivity improvements. This is a competitive advantage that Chester can sustain or even widen further if its competitors have no HR initiatives. Now, refer to the Income Statement in Chester's Annual Report. How much did Chester's productivity improvements save it in direct labor costs (in thousands) last year?
Explanation / Answer
Assuming a $ 100 as the Labour cost the savings by Chester is
A Assumed Cost without productivity 100.00 B Productivity 109.40% C=A/B Cost after Productivity 91.41 D=A-C Net Savings 8.59 D/A Savings 8.59%