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

The energy productivity increased by 12.47%, indicating improved energy efficiency due to the oven modifications. However, the capital productivity actually decreased by 20%, meaning there was a higher capital investment per dozen produced. Labor productivity increased by 5.89%, reflecting a more efficient use of labor hours.

Step-by-step explanation:

To determine if the modifications to the bakery's ovens were beneficial, we need to calculate the increases in energy, capital, and labor productivity by comparing last year's data to this year's data. Productivity measures how efficiently inputs are converted into outputs.

Energy Productivity Increase is calculated by comparing the BTUs (energy) used per dozen of production from last year to this year. Last year's energy use was 3,200 BTUs for 1,500 dozens, which is 2.133 BTUs per dozen. This year's energy use is 2,800 BTUs for the same number of dozens, which is 1.867 BTUs per dozen. The energy productivity increase can be expressed as a percentage decrease in energy use per dozen: ((2.133 - 1.867) / 2.133) * 100% = 12.47%.

Capital Productivity Increase can be found by comparing the capital investment per dozen. Last year, it was $15,000 for 1,500 dozens, equaling $10 per dozen. This year, it's $18,000 for 1,500 dozens, equaling $12 per dozen. The capital productivity increase is, in this case, actually a decrease, since more capital is required per dozen this year: ((10 - 12) / 10) * 100% = -20%.

Labor Productivity Increase is analyzed by comparing the hours of labor per dozen. Last year required 340 hours for 1,500 dozens, or 0.2267 hours per dozen. This year it is 320 hours for 1,500 dozens, or 0.2133 hours per dozen. The labor productivity increase is: ((0.2267 - 0.2133) / 0.2267) * 100% = 5.89%.

Answer 2

Answer: a. 12.5%

b. -16.67%

c. 5.88%

Step-by-step 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%