Suppose you are the Director of Human Resources at the local Toyota dealership. You have recently determined that the monthly sales revenue per employee is $8800 (that is your dealership makes $8800 per employee each month). Currently the dealership has 50 employees with an average salary of $20/hour. This ends up being for each employee: ($20/hr)(40 hr/week)(4 weeks) $3200 per month. You consider the wages (50 employees)($3200 per month) to be your monthly costs and suspect that it may be possible to hire a few more employees to maximize the dealership's monthly profits. A job-satisfaction survey has shown that for every $2 increase in hourly pay you are more likely to recruit and retain 4 employees.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Suppose you are the Director of Human Resources at the local Toyota dealership. You have recently determined that
the monthly sales revenue per employee is $8800 (that is your dealership makes $8800 per employee each month).
Currently the dealership has 50 employees with an average salary of $20/hour. This ends up being for each employee:
($20/hr)(40 hr/week)(4 weeks) = $3200 per month. You consider the wages (50 employees)($3200 per month) to be
your monthly costs and suspect that it may be possible to hire a few more employees to maximize the dealership's
monthly profits. A job-satisfaction survey has shown that for every $2 increase in hourly pay you are more likely to
recruit and retain 4 employees.
A. How many new employees should the dealership hire in order to maximize the monthly profit?
B. Based on your work in Part A., you immediately hire more employees and increase the salary of those employees
you have. In the first two months you discover an increase in monthly profit for the dealership is $16,000! If you
invest that money into an account that earns 8% annual interest rate compounded continuously, how long until you
can give each employee a $300 bonus?
Transcribed Image Text:Problem: Suppose you are the Director of Human Resources at the local Toyota dealership. You have recently determined that the monthly sales revenue per employee is $8800 (that is your dealership makes $8800 per employee each month). Currently the dealership has 50 employees with an average salary of $20/hour. This ends up being for each employee: ($20/hr)(40 hr/week)(4 weeks) = $3200 per month. You consider the wages (50 employees)($3200 per month) to be your monthly costs and suspect that it may be possible to hire a few more employees to maximize the dealership's monthly profits. A job-satisfaction survey has shown that for every $2 increase in hourly pay you are more likely to recruit and retain 4 employees. A. How many new employees should the dealership hire in order to maximize the monthly profit? B. Based on your work in Part A., you immediately hire more employees and increase the salary of those employees you have. In the first two months you discover an increase in monthly profit for the dealership is $16,000! If you invest that money into an account that earns 8% annual interest rate compounded continuously, how long until you can give each employee a $300 bonus?
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