Question

The monthly cost of running a small business consists of retail space rental at $2400, wages at $1800 and utilities at $480. If the retail space rental and wages are decreased by 5% and 6% respectively, while utilities are increased by 7%, find the percentage increase or decrease in the monthly cost of running the business.

Answer 1

5.8%

Explanation:

For the business,

retail space rental = $2400

wages = $1800

utilities = $480

Total running cost = $4680

But,

retail space rental decreased by 5%, so that;

5% of $2400 = 0.05 x $2400 = $125

The new retail space rental = $2400 - $125

= $2275

wages decreased by 6%, so that;

6% of $1800 = 0.06 x $1800 = $108

The new wages = $1800 - $108

= $1620

Utilities increased by 7%, so that;

7% of $480 = 0.07 x $480 = $33.6

The new amount on utilities = $480 + $33.6

= $513.6

New total running cost = $2275 + $1620 + $513.6

= $4408.6

The percentage decrease in the monthly cost =
`((4680 - 4408.6))/(4680)` x 100%

=
`(271.4)/(4680)` x 100%

= 5.8%