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Supervisory Training: Cost-Benefit Ratio & ROI

The Training Director expects that supervisory training will reduce the cost of grievances and lawsuits filed against the company by 50%. The current estimate of these costs is judged to be $100,000 per year. The director has allocated $2,500 for course development and $500 each for the actual training of 20 supervisors, which includes all trainer and materials costs.

This discussion requires the following activities:
1. Calculate the cost-benefit ratio.
2. Calculate the ROI.

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Key terms: return on investment, initial investment, financial gain, ratios

This question is designed to test your ability to manipulate financial ratios. Think like a manager when you see these types of problems, and evaluate if cost expenditures exceed possible profits. Profits are the lifeblood of every for-profit business entity, thus, financial returns are extremely important to ...