Question

Brown's, a local​ bakery, is worried about increased costs particularly energy. Last​ year's records can provide a fairly good estimate of the parameters for this year. Wende​ Brown, the​ owner, does not believe things have changed​ much, but she did invest an additional $2,500 for modifications to the​ bakery's ovens to make them more energy efficient. The modifications were supposed to make the ovens at least 15% more efficient. Brown has asked you to check the energy savings of the new ovens and also to look over other measures of the​ bakery's productivity to see if the modifications were beneficial. You have the following data to work​ with:

Production (dozen) Labor (hours) Capital Investment ($) Energy (BTU) Last Year 1,600 350 15,000 3,200 Now 1,600 325 17,500 2,750

Answer 1

1. Energy productivity Change:

  Last year : (1600*12) /3200 = 6.00/ BTU

Now : (1600*12) /2750 = 6.98/BTU

Percent Change: ((6.98-6.00)/6.00) *100= 16.33%

2. Capital Productivity Change:

  Last year : (1600*12) /15,000 = 1.28/ BTU

Now : (1600*12) /17,500 = 1.09/BTU

Percent Change: ((1.09-1.28)/1.28) *100= -14.84%

3. Labor Productivity Change:

  Last year : (1600*12) /350 = 54.86/ BTU

Now : (1600*12) /325 = 59.08/BTU

Percent Change: ((59.08-54.86)/54.86) *100= 7.69%