Rogal and Associates Legal Services hires full- and part-time professional employees. Full-time experienced staff can be hired for a salary of $60,000 per year; fringe benefit costs for each full-time employee amount to 20 percent of base salary. Rogal and Associates pays part-time professional employees $50 per hour but does not provide any fringe benefits. If a part-time employee has worked for the firm for more than 1,500 hours by year-end, he or she receives a $4,500 bonus.
a. Does the firm's policy of hiring part-time professional staff represent an example of cost containment, cost avoidance, or cost reduction? Explain.
b. For a given professional position, at what level of annual hours worked should the firm consider hiring full-time rather than part-time professional staff?