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10 51 Operating budgets: labor hiring and production plan Mira Vista Planters provides

reforestation services to larger paper products companies. It must hire one planter for every 10,000

trees that it has contracted to plant each month. New employees are hired in the month needed, on

the first day of the month. An employee must receive one week of evaluation and training before

being profitably employed and therefore works three out of all four weeks in the month hired. New

employees are paid full wages for all four weeks. For every five prospective employees who enter

training, three are deemed suitable for employment. When cutbacks occur, employees are laid off

on the first day of the month. Every employee laid off receives severance pay equal to one weeks

salary, which is on average $400, regardless of how pong the layoff will last. Laid-off employees

inevitably drift away, and new hires must be trained. The organization will have two trained

employees on January 1 and wants to have at least one trained employee at the end of each month.

The company has been offered the following contracts for the upcoming year. Each monthly

contract is offered on an accept or reject basis; that is, if a monthly contract is accepted, it must be

completed in full. Partial completion is not acceptable. The revenue per tree planted is $0.20.
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Prepare a labor plan for the upcoming year, indicating the following for each month:

a) Whether you feel the company should accept or reject the proposed planting contract.

Based on my calculations, shown in the tables below, I feel the company

should accept the proposed planting contract, as the final result is an annual net

profit of $25,195.20.

Annual Net Profit = Total Monthly Profit + Total Laid Off Planter Wages

= -$31,604.80 + $56,800.00

= $25,195.20
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b) How many people will be hired for training. (Recall that an employee is not available

for planting during the week of training and that only three of the five employees are

accepted for training can be hired.)

A total of 239 planters will be hired for training, as seen in Table 6.

c) How many people will be laid off.

A total of 143 planters will be laid off, as seen in Table 5.

Table 1:
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Equation used for calculations shown below:

o Monthly Revenue = (C) = (A) x (B)

Table 2:
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Equations used for calculations shown below:

o Number of Planters Needed = (B) = (A) / (D)

o Demand in Decimal Value = (E) = (D) x (C)

Table 3:
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Equations used for calculations shown below:

o Demand in Decimal Value (A) Refer to Table 2

o Actual Trees Needed in Each Month = (B) = (A) Monthly Closing Capacity of

Previous Month

o Number of Planters Needed = (C) = (+B) / One Planter Capacity

o Number of Planters Opening = (D) = Number of Planters Closing in Previous

Month

o Number of Planters to be Hired = (E) = (C) x (4/3)

o Number of Planters in Training = (F) = (E) x (5/3)

o Number of Planters Laid Off = (G) = (-B) / One Planter Capacity

o Number of Planters Closing = (H) = (D) + (E)

o Monthly Closing Capacity = (I) = (H) x One Planter Capacity

Table 4:
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Equation used for calculations shown below:

Closing Planter Wages = (D) = (A) x (B) x (C)

Table 5:
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Equation used for calculations shown below:

Laid Off Planter Wages = (C) = (A) x (B)

Table 6:
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Equation used for calculations shown below:

Monthly Cost of Training = (C) = (A) x (B)

Table 7:
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Equation used for calculations shown below:

Monthly Cost of Planter = (D) = (A) + (B) + (C)

Table 8:
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Equation used for calculations shown below:

Annual Revenue = (C) = (A) (B)

10 52 Operating budgets: labor hiring plan Strathfield Motel is planning its operations for

the upcoming tourist season. The motel has 60 units. The following table presents the average

number of daily rentals expected for each of the 12 weeks of the tourist season.

The motel hires housekeeping staff on a weekly basis. Each person can clean 15 rooms per

day. Employees must be hired for the entire week at a wage of $400 per employee per week.

Because of the motels location in a midsize city, trained people are always available to work on

short notice.

The motel does not own its linen and towels but rents them from a rental agency in a nearby

city. The rental contract must be signed for a 4-week period and for a fixed amount of linen and

towels. Therefore, the hotel must sign three contracts for the 12-week tourist season. The contract

provides the linen required for each room for $3 per night.
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Prepare a weekly budget for the hotel showing the following:

a) The number of housekeeping staff to employ.

Equations used for calculations are shown below:

o Number of Housekeeping Staff Required per week = (A) x 1/15 = (B)

o Total Cost of Housekeeping Employees = (C) x (D) = (E)

The Strathfield Motel will need to hire a total of 44 housekeepers, resulting in a total

labor cost of $17,600.

b) The number of linen and towel units to contract.

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Equations used for calculations are shown below:

o Cost of Linens per Week = Linens Required for Each Room per Night x Number of

Days per Week

o Total Cost of Linens = (A) x (B) = (C)

* Number of linens per 4-week period determined based on the maximum number of units

rented during the selected 4-week period.

The Strathfield Motel will need to contract a total of 680 linen and towel units, resulting

in a total cost of $14,280.

10 53 Financial budgets: expense budget During the school year, the Homebush School band

arranges concert dates in many communities. Because only part of the schools travel expenses are
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covered by the concert admission fees, the band raises money to help defray its operating expenses

through events in the local community such as car washes.

To estimate its expenses for the upcoming year, the bands manager has estimated the

number of concert dates for each of the school months, September through May. For each concert,

the manager estimates hotel costs of $900, food costs of $480, bus rental costs of $600, and other

costs of $200.

The following table presents the number of planned concerts during the upcoming year:

Prepare a monthly schedule estimating the bands travel expenses.