COST SEPARATION
About eight years ago, Kicker faced the problem of rapidly increasing costs associated with workplace accidents. The costs included the following:
|
State unemployment insurance premiums
|
$100,000
|
|
Average cost per injury
|
$1,500
|
|
Number of injuries per year
|
15
|
|
Number of serious injuries
|
4
|
|
Number of workdays lost
|
30
|
A safety program was implemented with the following features: hiring a safety director, new employee orientation, stretching required four times a day, and system- atic monitoring of adherence to the program by directors and supervisors. A year later, the indicators were as follows:
|
State unemployment insurance premiums
|
$50,000
|
|
Average cost per injury
|
$50
|
|
Number of injuries per year
|
10
|
|
Number of serious injuries
|
0
|
|
Number of workdays lost
|
0
|
|
Safety director's starting salary
|
$60,000
|
Required:
1. Discuss the safety-related costs listed. Are they variable or fixed with respect to speak- ers sold? With respect to other independent variables (describe)?
2. Did the safety program pay for itself? Discuss your reasoning.