Brown\'s, a local bakery, is worried about increased costs particularly energy.

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: Energy productivity increase = 14.29% Capital productivity increase = % (enter your response as a percentage rounded to two decimal places and include a minus sign if necessary).

Explanation / Answer

a. Energy Productivity Increase will have to be calculated as follows:

Last year : 1500*12/3200 = 5.625 loaves/BTU

Now : 1500*12/2800 = 6.428 loaves/BTU

Percent Change: (6.428-5.625)/5.625*100= 14.27%

b. Capital Productivity Increase will have to be calculated as follows:

Last year : 1500*12/15000 = 1.2 loaves/$ investment

Now : 1500*12/17500 = 1.02 loaves/$ investment

Percent Change: (1.02-1.2)/1.2*100= -15%

We observe that there is a decrease in the investment productivity. This can be however be substantiated with the fact that due to this investment, the energy savings is now possible and that this has cause an increase in the energy productivity

  

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.