Question

Assume chester corp. is downsizing the size of their workforce by 20% (to the nearest person) next year from various strategic initiatives. chester 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? select : 1 save answer

O $353,940
O $1,415,760
O $582,960
O $145,740

Answer 1

Downsizing 20% of Chester's 500-person workforce means 100 employees impacted. Exit interviews costing $100 each add $10,000 to usual $500,000 separation costs. Total cost? $510,000.

Here's how we can calculate it:

1. Number of employees laid off: Chester Corp. is downsizing by 20%, and their current workforce is 500 employees. Therefore, the number of employees laid off will be 0.2 * 500 = 100 (rounded to the nearest person).
2. Exit interview cost: The cost per employee for exit interviews is $100, so the total cost for all laid-off employees will be 100 * 100 = $10,000.
3. Normal separation cost: Each laid-off employee receives a normal separation cost of $5000. Therefore, the total normal separation cost will be 5000 * 100 = $500,000.
4. Total separation cost: To find the total cost, we add the exit interview cost to the normal separation cost: 10,000 + 500,000 = $510,000.

Therefore, Chester Corp. will pay $510,000 in separation costs if they implement the exit interviews alongside the downsizing process.

The other options provided are incorrect:

• $353,940: This would be the total cost if only the normal separation cost is considered, without the exit interviews.
• $1,415,760: This is significantly higher than the actual cost and appears to be an incorrect calculation.
• $582,960: This amount is slightly higher than the actual cost and might be the result of rounding errors in calculations.

The correct answer is $510,000.