Superior Cleaning Services, LLC, provides cleaning services for office buildings. The firm has 10 members in the LLC, which did not change

Superior Cleaning Services, LLC, provides cleaning services for office buildings. The firm has 10 members in the LLC, which did not change between 2014 and 2015. During 2015, the business terminated two commercial contracts. The following revenue and employee information is provided:








2015 2014
Revenues (in thousands) $16,200 $18,400
Number of employees (excluding members) 150 200



a. For 2015 and 2014, determine the revenue per employee (excluding members).
b. Interpret the trend between the two years.


Answer:










$16,200,000
a. Revenue per employee, 2015:
Revenue per employee, 2014:
150
$18,400,000
200
= $108,000
= $92,000



b. Revenues decreased between the two years; however, the number of employees has decreased at a faster rate. Thus, the revenue per employee increased from $92,000 in 2014 to $108,000 in 2015. This indicates that the efficiency of the firm has increased in the two years, even though revenues declined. This is likely the result of the termination of the two contracts. That is, the large decrease in the employment base is the likely result of the reduction in business. Thus, the business was able to reduce the workforce faster than the revenue base. This suggests that the contracts were not very efficient from a revenue per employee perspective, and were thus likely good candidates for termination.