You have several different units of time you can use on your items.  Man hour, mh assumes that each person on the crew can achieve that productivity.  ch, crew hour, assumes that it takes the entire crew to achieve that productivity. So what about generic hours, hour or hr.  If your database is set to Average a generic hr is treated like a man hour (I believe they've changed it to 'person hour' in 22.1).  If the database is set to Total, the generic hour is treated like a crew hour.  You can see how your database is set by looking at the Default crew pricing field on the info page for an estimate.  You can change it in the Database area of Management Console. 

Make sure you have a backup of your database before you change it.  The system will automatically adjust productivity on the items to reflect the crew composition if you change from average to total (or vice versa)  For instance, if you change from Total to Average and have an item with 2 crew members on it the system will divide the productivity by 2. Using mh and ch makes it more understandable.

Based on your questions it sounds like you need to use mh or set your database to Average

Hope this helped.

In that case, let's say i have 1000lf of an item, and i set my productivity to 100lf/mh for a crew of four, the crew should be done in 2.5mh since every guy on that crew produces 100lf an hour. In my spreadsheet my labor hours are at 10hours. 

My database is set to Average and I'm using man hours, am i missing something?

Here's a screen capture of a couple of test items.

I finally understood how the system thinks and works. Your answer was spot on. Thank you for the information Gary!