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 ​$3,000 for modifications to the​ bakery's ovens to make them more energy efficient. The modifications were supposed to make the ovens at least 20​% more efficient. Brown has asked you to check the energy savings of the new ovens and also to look over other measures of the​ bakery's productivity to see if the modifications were beneficial. You have the following data to work​ with:
Last Year Now
Production​ (dozen) 1,500 1,500
Labor​ (hours) 340 320
Capital Investment​ ($) 15,000 18,000
Energy​ (BTU) 3,200 2,800

Energy productivity increase​ =_______________
Capital productivity increase=_______________
Labor productivity increase = _______________

Answer 1

Answer: a. 12.5%

b. -16.67%

c. 5.88%

Explanation:

a. Energy Change will be:

(Production x 12)/Energy

Last year : (1500 × 12)/3200

= 5.625loaves/BTU

Now : (1500 × 12)/2800

= 6.42857 loaves/BTU

Percent Change will be:

= [6.42857 - 5.625]/6.42857 × 100

= 12.5%

b. Capital productivity increase will be:

= Production x 12)/Capital investment

Last year : (1500 × 12)/15000

= 1.2loaves/BTU

Now : (1500 × 12)/18000

= 1 loaves/BTU

Percent Change will be:

= (1-1.2)/1.2 × 100

= -16.67%

b. Labor Change:

Last year : (1500 × 12)/340

= 52.94 loaves/labor hour

Now : (1500 × 12)/320

= 56.25 loaves/labor hour

Percent Change:

= (56.25 - 52.94/56.25) × 100

= 5.88%