Question
Accounting and Consulting Group (ACG) has two divisions, Accounting and Consulting. ACG employs 20 consultants, a number that cannot be changed in the short run,
Accounting and Consulting Group (ACG) has two divisions, Accounting and Consulting. ACG employs 20 consultants, a number that cannot be changed in the short run, and consultants are paid in the following way: they are given a salary of $2,500 per week, and, for each hour the consultant works, she is paid an additional $150 / hour. Consultants are available to work a maximum of 50 hours per week; if there is no work, consultants are expected to be at their desks on standby for when work comes in. Other than the wage difference, consultants are equally happy working or waiting.
- The Consulting division (C) currently faces a weekly external demand for its services which is best estimated by the equation Q = 1500 P, where Q is consulting hours and P is the price (in dollars per hour) that it charges for consulting. The Accounting (A) division needs some help and has requested that the C division supply it with 100 hours of consulting per week. If the A division compensates the C division so that C is no worse off after supplying the 100 consulting hours per week, how much should A pay C for the consulting?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started