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they ask in the question to calculate the incremental revenue and cost , the question provide information regarding staff cost as below – the days 50 for working on sunday 50 weeks
It has been agreed to pay time and a half to sales assistants that work on Sundays. The normal
hourly rate is $20 per hour. In total five sales assistants will be needed for the six hours that
the store will be open on a Sunday. They will also be able to take a half-day off (four hours)
during the week. Staffing levels will be allowed to reduce slightly during the week to avoid
extra costs being incurred.the answer is
Staff costs on a Sunday are 5 staff × 6 hours × $20 per hour × 1.5 = $900 per day
Annual cost is $900 × 50 days = $45,000i understand the answer above but my question shouldn’t this amount be reduced by the 4 hour during the week. and the second thing they mentioned that the staff cost will be reduced to avoid extra cost , it is likely to imply that the staff cost not all of it incremental
The two things go together.
The store will still be open normal hours during the week and so they will still need to pay for all the open hours. This on its own would mean paying more if they kept fully staffed but by reducing staffing levels slightly they avoid this extra costs.
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