cost benefit analyst presents data as a ratio to determine Financial impact on c
ID: 434811 • Letter: C
Question
cost benefit analyst presents data as a ratio to determine Financial impact on company profitability the formula is cost benefit ratio equal value of projected benefits divided by cost.
we have estimated that a training program on sexual harassment will cost $14,000 and result in a savings of $70,000 cost of two settlements we paid last year.
a. what is the cost benefit ratio of this training?
b. what is the return on investment after one year?
c. do you agree that we can use the amount of our settlements from the prior as our savings figure? why or why not?
Explanation / Answer
A. Value of the projected benefits = $70,000
Cost = $14,000
Cost-benefit ratio = value of projected benefits / cost.
= $70,000/$14,000= 5 times
B. ROI= (Total benefit of the training-Total cost/Total cost)*100
ROI = [($70000-$14000)/$14000]*100= 4*100= 400%
C. No, I would not agree that we can use the amount of our settlements of sexual harassment from the prior year as our savings figure because the cost incurred in last year for the training program on sexual harassment saved the company $70,000. This cost which was incurred in the last year, so it is the cost of sexual harassment settlements for that particular year. This cost is not reportable as savings figure for any other year. This year total saving is $70,000 and net savings is ($70,000-$14,000= $56000). Using this information for another year would throw the whole savings figure off for future years but we can use it for this year.
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