question 6 of 10: it costs a company $300 for the average employee to report absent due to illness. last…

question 6 of 10: it costs a company $300 for the average employee to report absent due to illness. last year, the company had 200 absences reported last year for a staff of 100 employees. a study reported that paying for a gym membership would reduce absenteeism by 40%. if the average gym membership costs $200/year; would it be cost effective to purchase an annual gym membership for each employee? a) yes b) no c) cant tell

question 6 of 10: it costs a company $300 for the average employee to report absent due to illness. last year, the company had 200 absences reported last year for a staff of 100 employees. a study reported that paying for a gym membership would reduce absenteeism by 40%. if the average gym membership costs $200/year; would it be cost effective to purchase an annual gym membership for each employee? a) yes b) no c) cant tell

Answer

Explanation:

Step1: Calculate cost of absences without gym membership

The cost per absence is $300 and there were 200 absences. So the total cost of absences without gym membership is $300\times200 = 60000$.

Step2: Calculate number of absences with gym membership

The study says paying for a gym membership reduces absenteeism by 40%. So the number of absences with gym membership is $200\times(1 - 0.4)=200\times0.6 = 120$.

Step3: Calculate cost of absences with gym membership

The cost per absence is still $300, so the cost of absences with gym membership is $300\times120 = 36000$.

Step4: Calculate cost of gym memberships

There are 100 employees and the cost per gym - membership is $200 per year. So the total cost of gym memberships is $200\times100 = 20000$.

Step5: Calculate total cost with gym membership

The total cost with gym membership is the sum of the cost of absences with gym membership and the cost of gym memberships, which is $36000+20000 = 56000$.

Step6: Compare costs

Since $56000<60000$, it is cost - effective.

Answer:

a) Yes