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Complete Question
Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. The bakery currently makes 1,800 loaves per month. The pay will be $8 per hour for employees and each employee works 160 hours per month.
Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $125 per month, but he will achieve the same new output (an increase to 2 comma 325.00) as the change in labor hours.
a) Current productivity for 640 work hours = nothing loaves/dollar (round your response to three decimal places).
Answer:
0.352 loaves/dollar
Explanation:
The formula for productivity is given as:
Output/Wages
Wages is calculated as = Cost per Employee × Number of hours Employees work per month
From the question, we are told that:
The pay will be $8 per hour for employees and each employee works 160 hours per month.
Wages = $(640 × 8)
= $5120
Output = 1,800 loaves per month.
Hence, Productivity = 1800 loaves /$5120
= 0.3515625
Approximately to 3 decimal places = 0.352 loaves per dollar
