Phoenix Computer manufactures and sells personal computers directly to customers. Orders are accepted by phone and through the company’s Web site. Phoenix will be introducing several new laptop models over the next few months, and management recognizes a need to develop technical support personnel to specialize in the new laptop systems. One option being considered is to hire new employees and put them through a three-month training program. Another option is to put current customer service specialists through a two-month training program on the new laptop models. Phoenix estimates that the need for laptop specialists will grow from 0 to 100 during the months of May through September as follows: May—20; June—30; July—85; August—85; and September—100. After September, Phoenix expects that maintaining a staff of 100 laptop specialists will be sufficient.

Managerial Report

Perform an analysis of the Phoenix Computer problem and prepare a report that summarizes your findings. Be sure to include information on and analysis of the following items:

1. The incremental salary and training cost associated with hiring a new employee and training him/her to be a laptop specialist.

2. The incremental salary and training cost associated with putting a current employee through the training program. (Don’t forget that a replacement must be hired when the current employee enters the program.)

3. Recommendations regarding the hiring and training plan that will minimize the salary and training costs over the February through August period as well as answers to these questions: What is the total cost of providing technical support for the new laptop models? How much higher will monthly payroll costs be in September than in January?