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Net increase of income by providing an incentive to employee

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Please help with formulas:

Tital Company estimates that providing employees with a new health insurance package with an additional cost of $34,900 will increase productivity by 6%. Current production is at 12,000 units where selling price is $190, total cost amounts to $150 which is inclusive of $120 in variable costs per unit. Determine the net increase in income if the 6% additional productivity is realized.

a) $15,500
b) %28,800
c) $34.900
d) $50,400
e) None of the above.

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Solution Summary

The solution determines the net increase of income by providing an incentive to employee.

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Current Total Production Costs = 12,000 x 150 = 1,800,000

Current Total Variable costs = 12000 x 120 = 1,440,000

Current total fixed costs = 12,000 x (total cost - variable cost) = 12,000 x 30 = ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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