PE 12-7A Revenue per employee

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.