A skilled handyman is currently running his own business without any employees.

Question

A skilled handyman is currently running his own business without any employees. In an effort to boost his profit, the handyman is considering employing some hired workers so that he can complete more jobs each week. In the table below are the handyman’s estimates on the number of jobs that could be completed if he hired up to five employees. In addition, he knows that each new job pays $350 per week, while each employee will be paid $25 per hour and work for 40 hours a week.

Assuming the goal of the handyman is to make the largest profit possible, the number of employees that should be hired is:

Number of employees Jobs completed 0   7 1 12 2 16 3 19 4 21 5 22

Explanation / Answer

Given that the one labour works for 40 hours and per hour wage is $25, the wage/week then would be = 25*40 = 1000.

This would be the costs, as more workers are employed, the cost would go up.

Also given that each job completed earns $350, this would be the revenue that the firm earns. So 350 times the jobs completed is the revenue.

Profit = total revenue - total cost.

AS it can be seen from the table above, it would be profitble to hire 3 workers, to earn a revenue of 6650 and to incur a cost of 3000, so that the profit = 3650.

jobs completed employees cost revenue profit 7 0 0 2450 2450 12 1 1000 4200 3200 16 2 2000 5600 3600 19 3 3000 6650 3650 21 4 4000 7350 3350 22 5 5000 7700 2700

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