Question

Assume Digby Corp. is downsizing the size of their workforce by 10% (to the nearest person) next year from various strategic initiatives. Digby is planning to conduct exit interviews to learn more about how they can improve in processes and increase productivity. The exit interviews are estimated to cost $100 per employee in additional to normal separation costs of $5000.
How much will the company pay in separation costs if these exit interviews are implemented next year?

Answer 1

Answer:

$1799280

Explanation:

EXISTING WORKFORCE = COMPLEMENT = 392 (SEE SECOND ROW, FOURTH COLUMN)

COMPANY WANT TO REDUCE THE SIZE BY 10%

SO NEW WORKFORCE = 392 -10% = 392-39.2 =352.8

SO TOTAL SEPARATION COST = NEW WORKFORCE X COST PER EMPLOYEE

TOTAL SEPARATION COST = 352.8 x (100 + 5000) =$1799280