The Cost and Benefits of Training (10 Marks)

Wonder World is an amusement park which caters to adults. There are a variety of rides that require a specific skill set to operate. CEO Charlotte would like to cross-train her ride operators to be able to operate multiple rides as they are currently only trained to operate one. This will prevent rides from having to close down when an operator calls in sick and there is no one qualified to cover. The company lost 30,000 dollars of revenue last year based on the closure of rides due to illness.

The goal is to train each of the 15 operators on 3 additional rides. Wonder World does not have a training department so the manager has decided to outsource the training to a consultant.

The consultant indicated that the Needs Analysis and Training Evaluation would take about 20 hours at a cost of $150/per hour. The program itself would cost $5,000to develop.

There would be a delivery fee of $100/per hour. The training would take a total of 4 hours per operator (this would be enough time to train them on 3 additional rides). Each operator will be trained individually.

The ride operators make $25/per hour and would need to be paid for the training time. The training would take place at the rides themselves so there is no need to rent space or to provide food.

The training would require some administrative support. The administrative assistant makes $15/per hour and she would dedicate 20 hours to organizing this training program.

The training would prevent all shut down of rides due to illness and would last 1 year.

1, List all of the expenses in the correct costing categories. (4 marks)

2. Calculate the total cost of the training program. (2 marks)

3. What is the Return on Investment over 1 year? (2 marks)

4. How would you convince the CEO of Wonder World to fund the training program? (2 marks)