Question

A	TB	TC	NB	MB	MC	AC
0	$          -	$   24.00	$ (24.00)
1	$         35	$      3.00	$      3.00	$   35.00	$      8.00	$   32.00
2	$         65	$   23.00	$   23.00	$   30.00	$   10.00	$   21.00
3	$         85	$   54.00	$   31.00	$   20.00	$   12.00	$   18.00
4	$         95	$   68.00	$   27.00	$   10.00	$   14.00	$   17.00
5	$       103	$   84.00	$   19.00	$      8.00	$   16.00	$   16.80
6	$       108	$ 104.00	$      4.00	$      5.00	$   20.00	$   17.33

Suppose a small business firm must spend $10,000 to train its workers to comply with new government “fairness” regulations that requires workers to attend, one time, a “sensitivity” seminar before the firm can legally engage in activity A. Once the seminar is over and paid for, what kind of cost is this? How does this cost affect the manager’s choice of activity level now? Explain

Answer 1

a small business firm must spend $10,000 to train its workers to comply with new government “fairness” regulations that requires workers to attend, one time, a “sensitivity” seminar before the firm can legally engage in activity A. Once the seminar is over and paid for.

This type of cost is direct cost to be added in calculaton as it is compulsory part of processing of activity A.

this cost affect the manager’s choice of activity level now, as after this seminar it is considered that all the employeers appointed are aware about the activity to be held and also aware about the work process, so no it is easy for the manager to assign employers to any recruitment of activity, also as the fixed cost is already incurred over the staff manaer will be utlising that input of seminar from the employees in the form of better goals achivement and the result will be reflected in the cost of product as well as on the behaviour of the organisation.