A manufacturer of dolls is experiencing a significant number of errors. Specifically, out of every 1,000 dolls there are 100 which are defective. The company makes 500,000 dolls a year and the cost to produce a doll is $3.50.

The doll company has decided to implement a training program to reduce mistakes. They have decided to engage a third party company to provide the training. The company believes there will be a 95% reduction in defective dolls for one year after the training. 

The needs analysis and training evaluation will cost 2,000.00. The training program itself will cost 5,600.00. 

The training will be delivered to 25 employees who make 30.00/h. The program takes 5 hours and all the employees can participate at the same time.  There will be light snacks provided at a cost of $15/per participant. 

The training will take place at the manufacturing location. Some minor administration will take place. This will be 20 hours at $15 per hour. The cost of the trainer to deliver the program is 100.00/hour.

 

1. What is the annual cost of the problem? Show the math!
2. What is the proposed annual benefit of the training program?
3. Assign each cost into the following categories:
   1. Direct
   2. Indirect
   3. Developmental
   4. Overhead
   5. Trainee compensation
4. What is the total cost of the training program?