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# Employee benefits can be rated in terms of Frequency and Instance Cost

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Re: Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
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Lowest F/C means lowest frequency which can be of the child birth benefit in which the employee receives a lump-sum bonus equal to 25% of the company`s average annual salary.

Highest F/C means highest frequency which can be daily and that is provided by the option :Each day, each employee receives a voucher for a free cup of coffee

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Re: Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
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The correct answer choice will depend upon the the frequency (F) of a benefit a single employee would be expected to receive the benefit over the span of a 20-year career with the company, upon the average cost (C) incurred by the company to provide the benefit:

Lowest F/C: Upon the birth of an employee's first child, the employee receives a lump-sum bonus equal to 25% of the company's average annual salary, since this would at most happen once during the entire period of 20 years.

Highest F/C: Every day, each employee receives a voucher for a free cup of coffee - highest frequency i.e. daily, with the company incurring the entire voucher cost.
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Re: Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
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For the highest, I initially picked coffee as well, but changed to the second option (breakfast). Breakfast frequency is much lower than the everyday coffee, however, the cost is essentially zero, making the F/C ratio infinite, thus the greatest... Any thoughts?
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Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
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parkhydel wrote:
Employee benefits can be rated in terms of Frequency and Instance Cost. The frequency of a benefit is the average number of times a single employee would be expected to receive the benefit over the span of a 20-year career with the company. Instance cost is the average cost incurred by the employer to provide the benefit to a single employee at the moment it is delivered. The frequency/Cost ratio (F/C ratio) is computed by dividing the frequency by the instance cost.

A business is considering various benefits to attract and retain employees. From the following list of benefits, select the benefit with the highest F/C ratio and select the benefit with the lowest F/C ratio. Make only two selections, one in each column.

Cant the Highest F/C in this case be "B"? As it is mentioned that the breakfast is volunteered by upper management, the employer cost can be zero too. In that can F/C tends to be infinite is what I have thought.

Also for the lowest F/C, why cant it be option E? Although the frequency is 20 over here, how can we compare the monthly cost of food with the average salary of the company?
Can any of the experts please clarify?

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Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
Quote:
Cant the Highest F/C in this case be "B"? As it is mentioned that the breakfast is volunteered by upper management, the employer cost can be zero too. In that can F/C tends to be infinite is what I have thought.

Served by volunteers from Upper management. Does it mean actually serving them breakfast, not paying for it. Maybe possible.
May be what they are talking of is bonhomie between senior management and employees.

Quote:
Also for the lowest F/C, why cant it be option E? Although the frequency is 20 over here, how can we compare the monthly cost of food with the average salary of the company?

F/C for 25% of annual salary is 1/0.25S, and for months food is =20/cost of months food for a person
Let us get both F/C with same numerator to equate them.
$$\frac{1}{0.25S}=\frac{20}{20*0.25S}=\frac{20}{5S}$$
Now denominator is FIVE times average annual salary vs one month expenditure on food for one person.
Which should be more?? Surely 5 times salary.

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Re: Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
chetan2u wrote:
Quote:
Cant the Highest F/C in this case be "B"? As it is mentioned that the breakfast is volunteered by upper management, the employer cost can be zero too. In that can F/C tends to be infinite is what I have thought.

Served by volunteers from Upper management. Does it mean actually serving them breakfast, not paying for it. Maybe possible.
May be what they are talking of is bonhomie between senior management and employees.

Quote:
Also for the lowest F/C, why cant it be option E? Although the frequency is 20 over here, how can we compare the monthly cost of food with the average salary of the company?

F/C for 25% of annual salary is 1/0.25S, and for months food is =20/cost of months food for a person
Let us get both F/C with same numerator to equate them.
$$\frac{1}{0.25S}=\frac{20}{20*0.25S}=\frac{20}{5S}$$
Now denominator is FIVE times average annual salary vs one month expenditure on food for one person.
Which should be more?? Surely 5 times salary.

Thanks for the explanation! chetan2u
The second part of the doubt is clear now, but could you please share the final view on the first one? I still find B to be a better option especially because of the word "Volunteered".
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Re: Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
Highest F/C made sense, lowest F/C was hard because I didn't realize how LOW of a frequency the birth of your first born child would be. Even though the instance cost wasn't that high.
Re: Employee benefits can be rated in terms of Frequency and Instance Cost [#permalink]
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