30. (Cost control activities) The firm of Kanton Associates, CPAs, hires full- and part-time clerical employees. Full-time clerical staff can be hired for $27,500 per year; fringe benefit costs for each full-time employee amount to 20 percent of base salary. Kanton Associates pays part-time clerical employees $20 per hour, but does not provide any fringe benefits. If, however, a part-time employee has worked for the firm for over 1,600 hours by year-end, he or she receives a $2,000 bonus.

a. Does the firm’s policy of hiring part-time clerical staff represent an example of cost containment, cost avoidance, or cost reduction? Explain.

b. For a given clerical position, at what level of annual hours worked should the firm consider hiring full-time clerical staff rather than part-time?