A Local Bank Manager Is Considering Adding Another Teller to His

question 24

Short Answer

A local bank manager is considering adding another teller to his staff in an effort to increase the number of hours the bank is open per day.
A) If the employee will cost the owner $3,000 per month and the bank generates $150/hour in revenue with variable costs of $25/hour, how many hours must the new teller work for the owner to break even?
B) The employee wants a raise to $3,500 per month and has agreed to work 140 hours. If variable costs remain at $25/hour and the bank's revenue is now uncertain because of stricter financial laws with a 50 percent chance of being $120/hour, a 30 percent chance of being $100/hour, and a 20 percent chance of being $75/hour, should the owner provide the raise?

• A) If the employee will cost the owner $3,000 per month and the bank generates $150/hour in revenue with variable costs of $25/hour, how many hours must the new teller work for the owner to break even?
• B) The employee wants a raise to $3,500 per month and has agreed to work 140 hours. If variable costs remain at $25/hour and the bank's revenue is now uncertain because of stricter financial laws with a 50 percent chance of being $120/hour, a 30 percent chance of being $100/hour, and a 20 percent chance of being $75/hour, should the owner provide the raise?

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Definitions:

Per Pound

A unit of measure used to express the price or cost of a commodity, production materials, or shipping rates based on weight in pounds.

Materials Price Variance

The difference between the actual cost of materials and the standard cost, multiplied by the quantity of materials purchased.

August

August is the eighth month of the year in the Gregorian calendar, typically associated with high summer in the northern hemisphere and often marked by holidays and seasonal activities.

Raw Materials Quantity Variance

The difference between the expected amount of raw materials required for production and the actual amount used.