A firm wishes to shut down an office and fire 100 employees. The company will save $3000 per month per employee. It is estimated that each employee contributes $4,100 to the company. The firm rents office space for this group of employees at $1500. What should the company do

The multiple choices are as follows:

a.Fire the employees and save $1500 on rent

b.Not fire the employees keeping them generates a profit of $1100 per employee

c.Not fire the employees since keeping them generates a profit of $1085 per employee

d.None of the above

The correct option is C,not fire the employees since keeping them generates a profit of $1085 per employee

Explanation:

The cost of paying all 100 employees is $300,000 i.e ($3000*100)

Since each employee contributes $4,100 to the company bottom-line,all of them would contribute $410,000 as a whole.

The rent of office of $1,500 is also a cost to consider as shutting down would mean rent is no longer paid

Profit from employees=$410,000-$300,000-$1,500=$108,500

Profit per employee=$108500 /100=$1085

The question is incomplete. Here is the complete question

A firm wishes to shut down an office and fire 100 employees. The company will save $3000 per month per employee. It is estimated that each employee contributes $4,100 to the company. The firm rents office space for this group of employees at $1500. What should the company do

a. Fire the employees and save $1500 on rent

b. Not fire the employees keeping them generates a profit of $1100 per employee

c. Not fire the employees since keeping them generates a profit of $1085 per employee

d. None of the above

Not fire the employees since keeping them generates a profit of $1085

Explanation:

The amount of money contributed by each employee in the company is $4,100

The amount of expenses made is $3,000

Fixed costs can be calculated by dividing the amount of money used in purchasing the office space by the total number of employees

= 1500/100

= $15

Therefore, the earnings made from each employee is

= $4,100-$3,000-$15

= $1085

Hence since the company is making a profit of $1085 per employee then there is no need to fire them.