# Thread: Average Profit

1. ## Average Profit

Hello,
This question has been really confusing me and I was wondering if someone can help me out. The question is as follows:

A large corporation has five plants which manufacture tires. It wants to look at overall average profits and use this to create an incentive scheme for managers. What measure of overall average profits should be used and why.

Profits \$7400 14400 12300 6200 3100
Employees 123 402 256 109 67

I am not sure if I am suppose to find the average profit by adding all the profit up and dividing it by the total employees or by 5 (the amount of plants involved). And I believe when I do find the average, I just use the values of each of the plant's profit minus the average and the plant with the highest value is making the most profit. That how I would do it but not sure if it is right.

If someone can help me out on this question, it would be much appreciated. =)

2. Not sure here, but I would divide each plant's profits by it's employees to find profits per worker for each plant, e.g. 7400/123, and then compare them. Assuming output per worker depends only on management skills, this information would be useful to see which managers are doing a good job, and who is falling behind.

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