A restaurant is worried about increased costs particularly energy. Last year\'s
ID: 410717 • Letter: A
Question
A restaurant is worried about increased costs particularly energy. Last year's records can provide a fairly good estimate of the parameters for this year. John Day, the owner, does not believe things have changed much, but he did invest an additional $3,000 for modifications to the resturaunt's ovens to make them more energy efficient. The modifications were supposed to make the ovens at least 20% more efficient. Day 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.
Last Year 1,500 340 15,000 3,200 Now Production (dozen) Labor (hours) CapitaL Investment (S) Energy (BTU) 325 18,000 2,800Explanation / Answer
(A)
Energy productivity last year ---> 1500 x 12 / 3200 = 5.625 units per BTU
Energy productivity this year ---> 1500 x 12 / 2800 = 6.429 units per BTU
% increase = (6.429 - 5.625) / 5.625 = 14.29%
Capital productivity last year ---> 1500 x 12 / 15000 = 1.2 units per dollar
Energy productivity this year ---> 1500 x 12 / 18000 = 1.0 units per dollar
% increase = (1.0 - 1.2) / 1.2 = -16.67%
Labor productivity last year ---> 1500 x 12 / 340 = 52.941 units per hours
Labor productivity this year ---> 1500 x 12 / 325 = 55.385 units per hours
% increase = (55.385 - 52.941) / 52.941 = 4.62%
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