Midnight Industries manufactures residential home lighting. The company's president, Laura Jacobs, is convinced that she must get concessions from the workers if Midnight is to compete effectively with increasing foreign competition. In particular, Jacobs is displeased with the cost of employee benefits. She doesn't mind conceding a competitive wage increase $($maximum $3$ percent$),$ but she wants the total compensation package to cost $3$ percent less. The current costs are shown in Exhibit A$.$

Exhibit A Current Compensation Costs

Average annual salary $$56,769$

Average hourly salary $$29\mathrm{.}29$

Average cost of benefits per employee $($see calculation below$)$ $$13,000$

Total Compensation $($salary $+$ benefits$)$ $$69,769$

Hours worked per day $8$

Benefits Average Employer Cost per Employee per Year

Canada Pension Plan $$3,170$

Employment Insurance $$1,319$

WorkSafe BC $$934$

Pension Contributions $$2460$

Group Insurance $($life$,$ health, disability$)$ $$523$

Short$-$term disability $$83$

Long$-$term disability $$129$

Discount program $$127$

Miscellaneous payments $($termination pay, moving expenses, etc.$)$ $$124$

Paid vacations $($average is $16$ days$)$ $$3,749$

Paid statutory holidays $(9$ days$)$ $$2,109$

Paid breaks $(60$ minutes$)$ $$727$

Paid leaves $($jury duty, bereavement, etc.$)$ $$66$

Employee Savings Plan Contribution $$1064$

Education Reimbursement Program $$804$

Employee Assistance Program $$687$

Special wage payments $$126$

Total $$13,000$

Your assistant has surveyed other companies that are obtaining concessions from employees.

You also have data indicating employee preferences for different benefits $($Exhibit B$).$

Exhibit B: Employee Benefit Priorities

Benefit

Employee Importance

Healthcare

$1$

Vacation

$2$

Life Insurance

$3$

Long$-$term disability

$4$

short$-$term disability

$5$

Paid breaks

$6$

Dental plan

$7$

Profit sharing

$8$

Savings plan contributions

$9$

Discount on goods

$10$

Based on all this information, you have two possible benefit packages that you can propose, labelled "Option $1"$ and "Option $2"($Exhibit C$).$

EXHIBIT C: Two Possible Packages for Cutting Benefit Costs

Option $1$

Annual $$25$ employee deductible for healthcare and dental plan

Employees must contribute $3\mathrm{.}5\%$ of base salary to pension plan

Require one year of service before eligibility for discount on goods and contribution to the savings plan

Option $2$

Improved claims processing for insurance

reduce paid sick leave by two days

eliminate one paid break

Exhibit D: Cost Cutting Savings

Cost$-$cutting strategy Savings as $\%$ of benefit cost

Require one year of service before eligibility for discount on goods and contribution to the savings plan $10\%$

Improved claims processing for insurance $10\%$

Questions

Given the data in Exhibits A and B and the information obtained from various insurance carriers and other information sources $($Exhibit D$),$ cost out these packages.

Which package should you recommend to Jacobs? Why?

Which option would require less employee input because it doesn't affect them much?

You must complete and submit your costing model in Excel.

Indicate your answers to the three questions in your Excel file.

There are some deliberately ambiguous points in the case. However, if you read the case carefully, you will come up with some relevant questions your classmates can address in the assignment discussion forum.

In this case, you must make assumptions in one or two places. Just ensure to state your assumptions clearly in your answers.

please help me with this