Question

Consider the following expenses:

a) Exiting employee salary during exit interview $20
b) HR employee salary during exit interview $40
c) Advertising for job opening $2,500
d) Record keeping actions for exiting employee $30
e) Compensation award program analysis $100

How should Chip and Maria calculate separation costs?
a. Add c and e together for a total of $2,600
b. Add a, b, and d together for a total of $90

Answer 1

The correct answer is B. To calculate the separation costs, Chip and Maria should total the expenses directly linked to an employee's exit, which include salaries during the exit interview and record keeping, summing up to $90.

Step-by-step explanation:

To calculate the separation costs, Chip and Maria should include all expenses directly associated with the process of an employee leaving the company. These would encompass expenses for the exit interview and other administrative tasks related to the separation. Hence, they should add:

• Exiting employee salary during exit interview: $20
• HR employee salary during exit interview: $40
• Record keeping actions for exiting employee: $30

Therefore, the total separation cost is calculated by summing these amounts, which equals to $90. Advertising for a job opening and conducting a compensation award program analysis are recruitment costs and unrelated to the cost of an employee’s separation.