A Firm Is Considering Adding a Second Secretary to Answer

question 19

Essay

A firm is considering adding a second secretary to answer phone calls and make appointments. The cost of the secretary will be $10/hour and she will work 200 hours each month. If each new client adds $400 of profit to the firm, how many clients must the secretary arrange for the firm to break even?
Suppose that the secretary has an equal chance of providing either 0, 2, or 6 new clients each month. Should the firm hire the secretary?

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Definitions:

Cost Reduction

Strategies or measures implemented to lower expenses and improve efficiency within an organization or project.

Financial Gains

Increases in wealth or income, typically resulting from investments, business operations, or other economic activities.

Offshoring

The practice of relocating business processes or production to a foreign country to reduce costs or take advantage of favorable conditions.

Canadian Firms

Companies that are incorporated in Canada, governed by Canadian law, and typically operate within Canadian markets.