How is total productivity calculated?

Total productivity is a measure that evaluates how efficiently inputs are transformed into outputs. In the context of the given question, productivity refers to the relationship between the revenue generated (net sales) and the resources used (total labor hours).

The correct calculation of total productivity is done by taking net sales and dividing it by total labor hours. This formula indicates how much revenue is earned per hour of labor, which is essential for assessing operational effectiveness. A higher productivity ratio suggests that a business is generating more sales per labor hour, which is a positive indicator of efficiency and profitability.

In contrast, the other approaches suggested do not accurately reflect the standard understanding of productivity. Summing net sales and labor hours or subtracting labor costs from total sales does not provide a meaningful measure of how effectively labor is contributing to sales generation. Therefore, focusing on the relationship between net sales and labor hours is crucial for understanding total productivity in this context.