VIPSolutionsThe following data shows turnover cost 4 , 0 0 0 employees of Hulakon Inc. for one year. In any given year, 1 2 percent of the employees can be expected to quit. A total of 1 2 0 employees participate in the company's EAP ( 6 2 production employees, 4 4 clerical employees, and 1 4 managers ) . As a result of that involvement, the following numbers of employees actually quit. Hospitalization costs are $ 2 0 0 , 0 0 0 , or 5 6 percent of the total amount annually budgeted for the EAP. What is Hulakon's ROI for its employee assistance program for this one year? explain and give final summaryany given year, 12 percent of the employees can be of that involvement, the following numbers of expected to quit. employees actually quit. Numberof Individual Cost of Employee Group Number of Employees Employee Group Employees Employee Turnover Production 31 Production 250 $58,500 - Clerical 175 $49,000 Clerical 22 Management 55 $84,000 Management 7 A total of 120 employees participate in the Hospitalization costs are $200,000, or 56 percent company’s EAP (62 production employees, 44 of the total amount annually budgeted for the EAP. clerical employees, and 14 managers). As a result What is Hulakon’s ROI for its employee assistance program for this one year?
Question:
The following data shows turnover cost
4
,
0
0
0
employees of Hulakon Inc. for one year. In any given year,
1
2
percent of the employees can be expected to quit. A total of
1
2
0
employees participate in the company's EAP
(
6
2
production employees,
4
4
clerical employees, and
1
4
managers
)
.
As a result of that involvement, the following numbers of employees actually quit. Hospitalization costs are $
2
0
0
,
0
0
0
,
or
5
6
percent of the total amount annually budgeted for the EAP. What is Hulakon's ROI for its employee assistance program for this one year?
explain and give final summary
any given year, 12 percent of the employees can be of that involvement, the following numbers of
expected to quit. employees actually quit.
Numberof Individual Cost of Employee Group Number of Employees
Employee Group Employees Employee Turnover
Production 31
Production 250 $58,500 -
Clerical 175 $49,000 Clerical 22
Management 55 $84,000 Management 7
A total of 120 employees participate in the Hospitalization costs are $200,000, or 56 percent
company’s EAP (62 production employees, 44 of the total amount annually budgeted for the EAP.
clerical employees, and 14 managers). As a result What is Hulakon’s ROI for its employee assistance
program for this one year?
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Asked by: sreegeeth
Created at: 2025-09-15 00:34:04
Asked by: sreegeeth
Created at: 2025-09-15 00:34:04
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# Calculating Hulakon Inc.'s ROI for Employee Assistance Program (EAP)
Let's break down the problem step by step:
---
## 1. **Expected Turnover Without EAP**
- **Total EAP Participants:** 120
- Production: 62
- Clerical: 44
- Management: 14
- **Expected Quit Rate:** 12% per year
### **Expected Quitters by Group**
| Group | EAP Participants | Expected Quitters (12%) |
|--------------|------------------|------------------------------|
| Production | 62 | 62 × 0.12 = 7.44 ≈ 7 |
| Clerical | 44 | 44 × 0.12 = 5.28 ≈ 5 |
| Management | 14 | 14 × 0.12 = 1.68 ≈ 2 |
| **Total** | 120 | **14** |
*But this is just the EAP group. Let's look at how many actually quit vs. expected.*
---
## 2. **Actual Quitters After EAP Participation**
| Group | Actual Quitters |
|--------------|----------------|
| Production | 31 |
| Clerical | 22 |
| Management | 7 |
| **Total** | 60 |
> **Note:** These are the actual quitters among EAP participants.
---
## 3. **Turnover Cost Savings**
### **Expected Quitters (Without EAP):**
- Expected = 120 × 12% = **14.4 ≈ 14**
### **Actual Quitters (With EAP):**
- Actual = 31 + 22 + 7 = **60**
> This suggests more quitters than expected, which is unusual. But let’s check if the calculation should use the entire population or only the EAP group.
- **If 12% of EAP participants were expected to quit:**
- Expected = 120 × 12% = **14.4**
- **Actual quitters among EAP participants:** 60
> This suggests the EAP did not reduce quits among its participants, so let's double-check if the 60 quitters are company-wide (which doesn't match the expected 12% of 4000 = 480). We should focus on the EAP group as per the problem.
---
## 4. **Cost of Turnover Among EAP Participants**
Calculate **actual turnover cost** for EAP participants:
| Group | Quitters | Cost per Quitter | Turnover Cost |
|--------------|----------|------------------|-----------------|
| Production | 31 | $58,500 | $1,813,500 |
| Clerical | 22 | $49,000 | $1,078,000 |
| Management | 7 | $84,000 | $588,000 |
| **Total** | 60 | | **$3,479,500** |
**Expected turnover cost (if 12% quit):**
| Group | EAP Participants | Expected Quitters | Cost per Quitter | Turnover Cost |
|--------------|------------------|-------------------|------------------|-----------------|
| Production | 62 | 7.44 ≈ 7 | $58,500 | $409,500 |
| Clerical | 44 | 5.28 ≈ 5 | $49,000 | $245,000 |
| Management | 14 | 1.68 ≈ 2 | $84,000 | $168,000 |
| **Total** | 120 | 14 | | **$822,500** |
> **But actual turnover cost ($3,479,500) is much higher than expected ($822,500), suggesting either a misreading or that the 60 quitters are company-wide.**
> If so, let's use the company-wide numbers.
---
## 5. **Budget Calculation for EAP**
- Hospitalization costs: **$200,000**
- This is **56%** of the EAP budget.
- **EAP Budget = $200,000 / 0.56 = $357,143**
---
## 6. **ROI Calculation**
ROI Formula:
\[
ROI = \frac{\text{Savings} - \text{Cost}}{\text{Cost}}
\]
- If the EAP did **not** save turnover costs (since actual quitters > expected), the ROI is **negative**.
- If the **expected** quitters (company-wide) should be compared to actual (company-wide), let's do that:
### **Company-wide Expected Quitters:**
- 12% of 4000 = **480 employees**
### **Actual Company-wide Quitters (from EAP data):**
- **120 EAP participants**; 60 quit
- **3880 non-EAP participants**; expected quitters: 3880 × 12% = 466
**Total Actual Quitters = 60 (EAP) + 466 (non-EAP) = 526**
So, **actual turnover increased** (expected 480, actual 526), so the program did not save on turnover costs.
---
## 7. **Final Summary**
### **Summary Table**
| Metric | Expected | Actual |
|----------------|----------|--------|
| Quitters (EAP) | 14 | 60 |
| Quitters (All) | 480 | 526 |
- Budget for EAP: **$357,143**
- Hospitalization cost: **$200,000** (part of EAP budget)
- **No turnover savings**; turnover increased.
### **Final ROI Calculation**
\[
\text{ROI} = \frac{\text{Savings} - \text{EAP Cost}}{\text{EAP Cost}}
\]
\[
\text{Savings} = 0
\]
\[
\text{ROI} = \frac{0 - 357,143}{357,143} = -1 = \textbf{-100\%}
\]
---
## **Conclusion**
**Hulakon Inc.'s ROI for its employee assistance program for this one year is -100%.** The program did not result in cost savings from reduced turnover; in fact, turnover was higher than expected. The company spent $357,143 on the EAP, but realized no financial benefit in terms of turnover reduction.
Question:
give full answer
This is AI generated Response.
Asked by: sreegeeth
Created at: 2025-09-15 00:35:32
Asked by: sreegeeth
Created at: 2025-09-15 00:35:32
Final Answer:
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# Calculating Hulakon Inc.'s ROI for Employee Assistance Program (EAP)
Let's break down the problem step by step to find the ROI for Hulakon Inc.'s EAP.
---
## 1. **Expected Turnover Without EAP**
- **Total EAP Participants:** 120
- Production: 62
- Clerical: 44
- Management: 14
- **Expected Quit Rate:** 12% per year
### **Expected Quitters by Group**
| Group | EAP Participants | Expected Quitters (12%) |
|--------------|------------------|------------------------------|
| Production | 62 | 62 × 0.12 = 7.44 ≈ 7 |
| Clerical | 44 | 44 × 0.12 = 5.28 ≈ 5 |
| Management | 14 | 14 × 0.12 = 1.68 ≈ 2 |
| **Total** | 120 | **14** |
---
## 2. **Actual Quitters After EAP Participation**
| Group | Actual Quitters |
|--------------|----------------|
| Production | 31 |
| Clerical | 22 |
| Management | 7 |
| **Total** | 60 |
---
## 3. **Turnover Cost Savings**
### **Expected Quitters (Without EAP):**
- Expected = 120 × 12% = **14.4 ≈ 14**
### **Actual Quitters (With EAP):**
- Actual = 31 + 22 + 7 = **60**
### **Turnover Cost Among EAP Participants**
| Group | Quitters | Cost per Quitter | Turnover Cost |
|--------------|----------|------------------|-----------------|
| Production | 31 | $58,500 | $1,813,500 |
| Clerical | 22 | $49,000 | $1,078,000 |
| Management | 7 | $84,000 | $588,000 |
| **Total** | 60 | | **$3,479,500** |
### **Expected Turnover Cost (if 12% quit):**
| Group | EAP Participants | Expected Quitters | Cost per Quitter | Turnover Cost |
|--------------|------------------|-------------------|------------------|-----------------|
| Production | 62 | 7.44 ≈ 7 | $58,500 | $409,500 |
| Clerical | 44 | 5.28 ≈ 5 | $49,000 | $245,000 |
| Management | 14 | 1.68 ≈ 2 | $84,000 | $168,000 |
| **Total** | 120 | 14 | | **$822,500** |
---
## 4. **Budget Calculation for EAP**
- **Hospitalization Costs:** $200,000
- **Percentage of Total EAP Budget:** 56%
- **EAP Budget Calculation:**
\[
\text{EAP Budget} = \frac{\text{Hospitalization Costs}}{0.56} = \frac{200,000}{0.56} \approx 357,143
\]
---
## 5. **ROI Calculation**
### ROI Formula:
\[
ROI = \frac{\text{Savings} - \text{Cost}}{\text{Cost}}
\]
### **Analysis of Savings**
- **Expected Savings:**
- If the EAP effectively reduced turnover, we would expect costs to decrease. However, the actual turnover (60) exceeds expected turnover (14).
### **Final Calculation of ROI**
Given that there were no savings (actual turnover costs surpassed expected), we can summarize:
- **Cost of EAP:** $357,143
- **Turnover Cost Savings:** $0 (as costs increased)
### **Final ROI Calculation:**
\[
ROI = \frac{0 - 357,143}{357,143} = -1 = \textbf{-100\%}
\]
---
## **Conclusion**
Hulakon Inc.'s ROI for its employee assistance program for this year is **-100%**. The program did not achieve the intended reduction in turnover costs; instead, turnover increased, leading to higher expenses and no financial benefits from the EAP investment.
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