FILAMER CHRISTIAN UNIVERSITY

AUTONOMOUS STATUS – CHED

GRADUATE SCHOOL
Roxas – Avenue, Roxas City, 5800, Philippines
Tel. No. (036) 6212 – 317 Fax No. 6213 – 075
Website: www.filamer.edu.ph

Jesalem H. Medina Prof. Violeta Barredo, CPA, MBA

MBA Student Course Facilitator

TOPIC: MANAGING PRODUCTIVITY

Productivity is the relationship between the outputs generated

from a system and the inputs that are used to create those
outputs.

Inputs – At the plant level, common input statistics are

monetary units, weights or volumes of raw or semi-finished
materials, kilowatt hours of power, and worker hours. These are
tracked as sets of partial productivity, such as kilowatt-hours
per ton or yield (weight of output divided by weight of input),
both of which are used in the chemical, refining, wood pulp, and
other process industries.

Outputs - Output is simply the rate of which goods are being

produced and readied for sale. Managing production levels is
part of the control process–management teams must predict demand
to avoid market saturation.

FORMULA:

1 |MANAGERIAL ACCOUNTING
 FILAMER CHRISTIAN UNIVERSITY
AUTONOMOUS STATUS – CHED
GRADUATE SCHOOL
Roxas – Avenue, Roxas City, 5800, Philippines
Tel. No. (036) 6212 – 317 Fax No. 6213 – 075
Website: www.filamer.edu.ph

Productivity Formula Examples:

Example 1: A Factory
Say that a factory produces $1,000,000 worth of televisions in a
month, with 800 hours worked in total by all of its employees.

The productivity formula would look like this:

Productivity = 1,000,000 / 800 = $1,250 / hour.
This means that the factory is producing $1,250 worth of
televisions an hour.

Example 2: A Country

The productivity formula can also be used to calculate the

productivity of a country. Say that the GDP per worker of a
country is $70,000 and the number of hours the average employee
works in a year is 2080.

The productivity formula would look like this:

Productivity = 70,000 / 2080 = $33.65 / hour.

This means that the productivity of the average worker in that
country is $33.65 an hour.

PRODUCTIVITY AND THE FIRM

Productivity growth is important to a firm because more real

income means the firm can meet its obligations to customers,
suppliers, workers, shareholders, and governments (taxes and
regulation), and still remain competitive or even improve its
competitiveness in the marketplace.

2 |MANAGERIAL ACCOUNTING
 FILAMER CHRISTIAN UNIVERSITY
AUTONOMOUS STATUS – CHED
GRADUATE SCHOOL
Roxas – Avenue, Roxas City, 5800, Philippines
Tel. No. (036) 6212 – 317 Fax No. 6213 – 075
Website: www.filamer.edu.ph

IMPROVING PRODUCTIVITY

Many companies have formal programs for improving productivity

via existing control systems. Companies are constantly looking
for ways to improve quality, reduce downtime, and increase
inputs of labor, materials, energy, and purchased services.
Simple changes to operating methods or processes can increase.
The biggest gains often come from adopting new technologies or
concepts, which requires capital expenditures for new equipment,
computers, or software.

THE IMPORTANCE OF PRODUCTIVITY

For businesses, productivity growth is important because

providing more goods and services to consumers translates to
higher profits. As productivity increases, an organization can
turn resources into revenues, paying stakeholders and retaining
cash flows for future growth and expansion. Productivity leads
to competitiveness and potentially competitive advantages.

PROCESSES THAT AFFECT PRODUCTIVITY

The main processes of a company are:

 Real process- the production output from input. It can be

described by the production function.
 Income distribution process - refers to a series of events
in which the unit prices of constant-quality products and
inputs change, causing an alteration in the income
distribution among those participating in the exchange.
 Production process - the real process and the income
distribution process.
 Monetary process- refers to financing a business and the
inputs of production.
 Market value process - refers to a series of events in which
investors determine the market value of the company in the
investment markets.

3 |MANAGERIAL ACCOUNTING
 FILAMER CHRISTIAN UNIVERSITY
AUTONOMOUS STATUS – CHED
GRADUATE SCHOOL
Roxas – Avenue, Roxas City, 5800, Philippines
Tel. No. (036) 6212 – 317 Fax No. 6213 – 075
Website: www.filamer.edu.ph

OTHER MEASURES AFFECTING PRODUCTIVITY

 Efficiency - Measures the resources expected to be

consumed to the resources actually consumed. Hence, it
focuses on the input side of the system.

 Effectiveness- Measures what the system sets out to

accomplish (objective) with what was actually
accomplished; plan vs. actual
 Hence, effectiveness is an output measure. (Is the
output “right” - right quality, right quantity, on time,
etc.)

 Quality- Degree to which the outputs (products and

services) from the system conform to requirements or meet
customer expectations. The focus is on quality attributes
(e.g., conformance, performance, convenience,
responsiveness, perceived quality.)

 Quality of Work Life- Measures the way that employees in

a system respond to the sociotechnical aspects of that
system.

 Innovation- Measures the applied creativity of the

system. Relates to the design and development of
improved products, services, and processes.

4 |MANAGERIAL ACCOUNTING