How does an improvement in productivity affect a business’s profit margin?

An improvement in productivity will lead to an improvement in business’s profit margin.

Explanation:

Productivity is the basis for generating profits in a company. Basically without productivity, there is no profit.

If the company decides to improve productivity, that is, to improve the capacity to produce much more the products or services it offers, then it will have more profits.

Within productivity we will find resources such as labor and manufacturing material that will serve for the company to produce its products or services. Now, if the company manages to use less of these resources and achieves better results, then it will have improved its productivity.

By spending less resources, and having more production, then the profits of the company will rise.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total