the extra output that the last worker hired adds

#The extra output that the last worker hired adds download

The concept of the marginal product of labor is important as it can influence major decisions regarding the production level of any company. Marginal Product of Labor = (Y 1 – Y 0) / (L 1 – L 0) Relevance and Use of Marginal Product of Labor Formula Marginal Product of Labor = Change in Production Output / Change in Input Labor Step 5: Finally, the formula for the marginal product of labor can be derived by dividing the change in production output (step 3) by the change in input labor (step 4) as shown below. Step 4: Next, calculate the change in labor input by deducting the initial labor input (step 1) from the final one (step 2). Step 3: Next, calculate the change in production output by subtracting the initial production output (step 1) from the final output (step 2).Ĭhange in Production Output, ΔY = Y 1 – Y 0 Step 2: Next, determine the final production output and the corresponding labor input which are denoted by Y 1 and L 1 respectively. Step 1: Firstly, determine the initial production output and the required labor input for that which are represented by Y 0 and L 0 respectively. The formula for the marginal product of labor can be computed by using the following steps: Marginal Product of Labor Jun = 500 pieces per Labor.Marginal Product of Labor May = 1,000 pieces per Labor.Marginal Product of Labor Apr = 1,500 pieces per Labor.

Marginal Product of Labor Mar = 2,500 pieces per Labor.

Marginal Product of Labor Feb = 2,000 pieces per Labor.

Marginal Product of Labor is calculated as During the first 6 months, the following production volume and workforce data are available, Calculate the marginal product of labor at the end of each month. Based on its successful recruitment of workers last year, the management has decided to further increase the workforce in a phased manner and track the change in productivity every month. Let us take the example of the above company again. Marginal Product of Labor Formula – Example #2 Therefore, SDF Ltd.’s marginal product of a labor of the new workforce is 2,000 pieces per labor that has resulted in an increase in the productivity of the entire team from 1,250 pieces per labor to 1,333 pieces per labor.

New Productivity = 1,333 pieces per Labor.

New Productivity is calculated using the formula given below

Existing Productivity = 1,250 pieces per Labor.

Marginal Product of Labor = 2,000 pieces per LaborĮxisting Productivity is calculated using the formula given below.

Marginal Product of Labor = (Y 1 – Y 0) / (L 1 – L 0) Marginal Product of Labor is calculated using the formula given below Also, compare the productivity of the new labor force with the existing ones. Calculate the marginal product of the labor of the company for the newly added labor force. As per the study, the monthly production volume increased from 500,000 pieces in FY17 to 600,000 pieces in FY18 owing to a corresponding increase in a number of labors from 400 to 450. Recently, the company’s management conducted a study to understand the impact of increasing workers on the production volume of the company.

Let us take the example of a company SDF Ltd which is engaged in the manufacturing automotive engine parts.

#The extra output that the last worker hired adds download

You can download this Marginal Product of Labor Formula Excel Template here – Marginal Product of Labor Formula Excel Template Marginal Product of Labor Formula – Example #1