COST SEPARATION About eight years ago, Kicker faced the problem of rapidly increasing costs associated with workplace accidents. The costs included the following:

State unemployment insurance premiums $100,000 Average cost per injury $1,500 Number of injuries per year 15 Number of serious injuries 4 Number of workdays lost 30 A safety program was implemented with the following features: hiring a safety director, new employee orientation, stretching required four times a day, and systematic monitoring of adherence to the program by directors and supervisors. A year later, the indicators were as follows:

State unemployment insurance premiums $50,000 Average cost per injury $50 Number of injuries per year 10 Number of serious injuries 0 Number of workdays lost 0 Safety director’s starting salary $60,000 Required:

. Discuss the safety-related costs listed. Are they variable or fixed with respect to speakers sold? With respect to other independent variables (describe)?

. Did the safety program pay for itself? Discuss your reasoning.

Problem