Question

A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 64 minutes is needed to do a title search. The researcher cost is $1.90 per minute. Clients are charged a fee of $460. Company A’s software would reduce the average search time by 19 minutes, at a cost of $4.00 per search. Company B’s software would reduce the average search time by 24 minutes at a cost of $6.00 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.)

Approach	Productivity (Revenue per Dollar Input)
Current	$
Company A	$
Company B	$

b. Which option would have the highest productivity in terms of revenue per dollar of input?

• Current

• Company B

• Company A

Answer 1

Title search time (mins) Productivity Revenue /Total cost Total cost Researcher Cost Search Cost Researcher Cost = Title search Company Revenue time 1.9 Calculation Value Calculation Value Current 460 64 64 121,6 121.6+0 121.6 3.78 460 64-19 85.5 45 85,5+4 89,4 5,15 460 64-24 76 P ло 76+6 82 5,61 So, we can see that productivity of Company B is the highest b) Company B would have the highest productivity in terms of revenue per dollar of input