Question

Develop a training budget assuming that the trainer is paid $140 per hour, that 8 hours are needed to develop training materials, and that the 5 workers earn $18 per hour including overhead. Present the alternatives in memo form to the business owner, and identify any additional information that should be taken into account when choosing between the two training schedules

Answer 1

The budget for training can be developed for the five workers as explained below:

What is Budget?

A budget is the calculation or prediction of the cashflows expected to occur in the next period, there are many types of budgets for example, cash budget, sales budget and expense budget.

The budget for the given scenario is calculated as follows.

The trainer will take $140 per hour and training requires 8 hours

$140 * 8hrs = $1,120.

While the workers earn $18 per hour and there are 5 workers, this is a sunk cost as the employees will be paid whether they attend the training or not but while in the training the workers will not be contributing towards the earnings of the company so this will be considered as an expense.

$18 * 5 workers * 8 hrs = $720.

Adding the two expenses provide $1,840   ($1,120 + $720)

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