Eclipse Architects earned $1,800,000 during 2014 using 12 employees. During 2015, the firm reduced revenues to $1,440,000

Eclipse Architects earned $1,800,000 during 2014 using 12 employees. During 2015, the firm reduced revenues to $1,440,000 and reduced the staff to 9 employees.

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


Answer:


















a. 2014:
2015:
$1,800,000
12 employees
$1,440,000
9 employees
= $150,000 per employee
= $160,000 per employee
b. Eclipse Architects reduced revenues by $360,000 ($1,800,000 –
$1,440,000), or 20% ($360,000 ÷ $1,800,000). The number of
employees declined by 3, or 25% (3 ÷ 12). The decline in revenue
was less than the decline in the 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.




Niles and Cohen, CPAs earned $12,375,000 during 2014 using 75 employees. During 2015, the firm grew revenues to $15,400,000 and expanded the staff to 88 employees.

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


Answer:

















a. 2014:
2015:
$12,375,000
75 employees
$15,400,000
88 employees
= $165,000 per employee
= $175,000 per employee
b. Niles and Cohen, CPAs grew revenues by $3,025,000 ($15,400,0000 –
$12,375,000), or 24.4% ($3,025,000 ÷ $12,375,000). The number of
employees expanded by 13, or 17.3% (13 ÷ 75). The growth in revenue
was more than the growth in the 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.