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 600 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 2000​) as the change in labor hours.

​a) Current productivity for 640 work hours​ ___ ​loaves/dollar ​(round your response to three decimal​ places).

Answer 1

Answer:

The bakery currently makes 600 loaves per month

Current pay for employees = $8 per hour

Monthly Work hours = 640

Current employee cost = 640 * $8 = $5,120

Current productivity for 640 work hours = Loaves produced per month / Monthly employee cost

= 600 / 5120

= 0.117 loaves/dollar

Current productivity for 640 work hours = 0.117 loaves/dollar