Question

A local company employs a varying number of employees each year, based on its needs. The labor costs for the company include a fixed cost of $44,604.00 each year, and $27,396.00 for each person employed for the year. For the next year, the company projects that labor costs will total $1,715,760.00. How many people does the company intend to employ next year?

Answer 1

Answer:

projected labour cost = 1715760 .....A

fixed labour cost = 44604 ......B

subtracting B from A will give us total variable labour cost which is (1715760 - 44604)= 1671156

variable labour cost of 1 labour is given as : 27396

therefore, no of people company will employ next year is calculated by

(total variable cost)÷( variable cost of 1 labour)

1715760÷27396= 62.62