Question: An activity analysis at Loaf s End Bread Company found the
An activity analysis at Loaf’s End Bread Company found the following activities for its bread makers: 10 percent of time, adding ingredients; 60 percent of time, mixing and kneading dough; 10 percent of time, shaping into loaves; and 10 percent of time, cleaning up. The total salary and benefits cost pool for bread makers is $850,000 per year. Loaf’s End is considering buying new equipment that would reduce the time required to mix and knead by 80 percent. What is the potential savings to Loaf’s End per year if it acquires the new equipment? What other value chain and quality issues, besides cost savings, should be considered?
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