Question

Problem 2-8 A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 55 minutes is needed to do a title search. The researcher cost is $2.00 per minute. Clients are charged a fee of $400. Company A's software would reduce the average search time by 12 minutes, at a cost of $3.40 per search. Company B's software would reduce the average search time by 17 minutes at a cost of $5.30 per search a. Calculate the productivity in terms of revenue per dollar of input. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.) Productivity (Revenue per Dollar Input Approach Current Company A Company B . wicn opicn woud hano r dingun CompanyA Company B O Current

Answer 1

a.

Here total cost is the input.

Productivity = Fees charged / Total cost

Current approach :

Total cost = [ 55 minutes * $2 per minute ] = $110

Productivity = $400 / $110 = $3.64

Company A :

Total cost = [ ( 55 minutes - 12 minutes ) * $2 per minute ] + $3.40 = $89.40

Productivity = $400 / $89.40 = $4.47

Company B :

Total cost = [ ( 55 minutes - 17 minutes ) * $2 per minute ] + $5.30 = $81.30

Productivity = $400 / $81.30 = $4.92

Approach	Productivity ( Revenue per Dollar input )
Current	$3.64
Company A	$4.47
Company B	$4.92

b. Company B is the correct answer.