A Local Business Owner Is Considering Adding Another Employee to His

question 83

Essay

A local business owner is considering adding another employee to his staff in an effort to increase the number of hours the store is open per day.
a. If the employee will cost the owner $4,000 per month and the store takes in $50/hour in revenue with variable costs of $15/hour, how many hours must the new employee work for the owner to break even?
b. The employee again costs $4000 and has agreed to work 120 hours. If variable costs remain at $15/hour and revenue is uncertain with a 40% chance of being $40/hour, 35% chance of being $20/hour, and 25% chance of being $35/hour should the owner hire the employee?

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Definitions:

Second-Class Tickets

Tickets offering a lower level of service or comfort on public transport, often at a reduced price compared to first-class tickets.

First-Class Tickets

Tickets that provide premium services and amenities above standard class, often associated with air travel, trains, or other transportation modes.

Income

The total amount of money earned by an individual or household from various sources, including wages, salaries, investments, and other forms of earnings, over a period of time.

Price

The value in terms of money expected, to be provided, or already given in exchange for a service.