Question

A local company employs a varying number of employees each year, based on its needs. The labor costs for the company include a fixed cost of $42,959.00 each year, and $29,498.00 for each person employed for the year. For the next year, the company projects that labor costs will total $2,638,783.00. How many people does the company intend to employ next year?

Answer 1

By setting up an equation with the total projected labor costs, subtracting the fixed costs, and dividing by the cost per employee, we can determine that the company plans to employ 88 people next year.

Step-by-step explanation:

To calculate how many people the company intends to employ next year, we need to take into account both the fixed costs and the variable costs per employee. The company has fixed labor costs of $42,959.00 each year, and additional costs of $29,498.00 per employee. Given that the total labor costs for the next year are projected to be $2,638,783.00, we can set up an equation to find the number of employees.

The equation for total labor costs is:

Fixed Costs + (Variable Cost per Employee x Number of Employees) = Total Projected Labor Costs

$42,959 + ($29,498 x Number of Employees) = $2,638,783

To find the Number of Employees, we first subtract the fixed costs from the total projected labor costs:

$2,638,783 - $42,959 = $2,595,824

Next, we divide this amount by the variable cost per employee:

$2,595,824 / $29,498 = 88

The company plans to employ 88 people next year.