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A cleaning company uses $10 of chemicals, $40 of labor, and $5 of misc. expenses for each house it cleans. After some quality complaints, the company has decided to increase its use of chemicals by 50%. By what percentage has multifactor productivity fallen?

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jepessoa

Answer:

8.3%

Explanation:

initial cost per house = $10 + $40 + $5 = $55 per house

after the 50% increase in the use of chemicals = $15 + $40 + $5 = $60 per house

new multifactor productivity = new cost of 1 clean house / old cost of one clean house = $55 / $60 = 0.917 or 91.7%

so the change in multifactor productivity = 100% - 91.7% = 8.3%

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