Tate’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. John Tate, the owner, does not believe things have changed much, but he did invest an additional $3,000 for modifications to the bakery’s ovens to make them more energy-efficient. The modifications were supposed to make the ovens at least 15% more efficient. Tate has asked you to check the energy savings of the new ovens (Calculate Labor, Capital Invested, Energy, and multifactor productivity) and also to look over other measures of the bakery’s productivity to see if the modifications were beneficial. You have the following data to work with:
LAST YEAR NOW
Production (dozen) 1,500 1,500
Labor (hours) 350 275
Capital investment ($) 15,000 18,000
Energy (BTU) 3,000 2,250