Mark\'s Ceramics spent $4000 on a new kiln last year, in the belief that it woul

Question

Mark's Ceramics spent $4000 on a new kiln last year, in the belief that it would increase productivity over the old kiln. This kiln is an oven that turns "greenware" into finished pottery. Mark wants to look over measures of their productivity to see if the change really was beneficial. Mark has the following data to work with:

- Last Year This Year
Production (finished units) 4000 4000
Greenware (pounds) 5000 5000
Labor (hrs) 350 375
Capital ($) 15000 19000
Energy (kWh) 3000 2600

Determine the percent change in capital productivity. Insert your answer without the "%" sign. For example, -3% is answered as -3.0.

Explanation / Answer

Capital Productivity = Total Output/Capital Employed

Last year Capital Productivity = 4000/15000 = 0.2666

This year Capital Productivity = 4000/19000 = 0.2105

Percentage Change in Capital Productivity = (0.2105-0.2666)/0.2666 = -0.05601/0.2666

                                                             = -0.21 = -21%

Answer should be written as -21.

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