Case Study #2
SHOW YOUR CALCULATIONS PROPERLY Background: Nicky’s Carpet Cleaning Company
You run Nicky’s Carpet Cleaning Company which cleans carpets
for commercial businesses. On average one carpet cleaner can
clean six offices in a seven hour shift, Monday through Friday. You
have 100 cleaners currently working for you, and they work 250 days
per year. A recent analysis of the rework that must be done finds that,
on average, one in every 6 carpets cleaned is not up to your
standards. Because of Nicky’s “Satisfaction Guarantee” when a
carpet does not meet the standards it is redone immediately at no
extra cost to the customer.
The profit on cleaning each office is $25. You pay your cleaners $15
per hour. ($105 per day) When you have to re-clean a carpet you
lose $20 in employee time.
Your training manager has done a needs assessment regarding this
issue at your request and has identified the cause as being a lack of
KSA’s. The training manager proposes a training program that he
estimates will reduce the re-cleaning by 50%. The training would
take 4 hours and they could train 25 employees per session. Training
could therefore be completed for all 100 employees over two
Saturdays, by running two four hour sessions on each Saturday. Costs Associated With Training
Postage to mail out pre-training materials to all employees $300 20 days of training manager’s time for creation of training
program $3,200 Training Facilitator Costs $650 ($325 per day) Training Facility Rental $1000 AV Equipment Rental for 2 Days ($1000 per day) $2,000 Refreshments for employees $600 Employee Wages (Nicky decides to conduct training on a
Saturday and pay his employees an extra $5 per hour as
overtime) $20 per hour per employee $8000 Cost of Facilitators Hotel Room/Expenses $600 Clerical Support to assist training manager in creating
Program- (20 hrs @ $10 per hr.) $200 External Consultant Fees associated with reviewing
Training Program created by training manager $800 Photocopying costs to produce brochure for all employees
with training information sent out prior to training. $200 Administrative support to prepare attendee lists/schedules for
training dates ( 10 hrs. @ $12 per hour)
Cost to purchase new LCD projector for training
department to share as old one no longer works $120 $2000 Case Study Questions 1. In reviewing the related costs associated with the training program
please identify which ones falls into the following categories:
Development Costs
Direct Costs
Indirect Costs
Trainee Compensation
Overhead Costs 2. How much do the re-cleanings cost Nicky each year? Show all
mathematical calculations.
3. After the training is complete, what is the estimated annual cost
savings each year? Show all mathematical calculations.
4. What is the total cost of conducting the training?
5. If training was cancelled the day before, what would the training costs
then be? (assume no cancellation fees would apply) Please list
items, show related costs and provide a final total. Case Study #2 Grading Rubric Excellent (2.5) Accuracy
Comprehension Above Average
(2) Satisfactory (1.5) All calculations are correct.
Correct solutions. Many calculations are
correct.
Small mistakes may exist. Most calculations are
correct.
Some mistakes exist. Fully understands the
problem.
Correct terminology and
notation are always used,
making it easy to understand
what was done. Shows good understanding
of the problem.
Knows how to do the math.
Correct terminology and
notation are used, making it
fairly easy to understand
what was done. Shows some
understanding of the
problem.
Does not understand all
parts of the problem.
Correct terminology and
notation are used, but it
is sometimes not easy to
understand what was
done. Needs Improvement
(1)
Calculations are not
correct.
Incorrect solutions.
Many mistakes exist.
Does not understand
the problem. Does
not show any
understanding of the
problem. There is
little use, or a lot of
inappropriate use of
terminology and
notation. No
Answer
(0)
