What will be the effect on profit of hiring a site supervisor

for $X who will be able to reduce direct costs by ▲Y% ?

Previous period total sales:

% Sales

Previous period Direct Job Costs (Cost of Goods Sold):

Previous period Fixed Costs (Operating and Overhead):

Previous period Break-even Sales:

Previous period labor as % of direct job costs:

Previous period materials as % of direct job costs:

Fully-loaded annual cost of a Site Supervisor ($X):

Expected reduction in direct labor costs with Site Supervisor (▲YL%):

Expected reduction in direct materials costs with Site Supervisor (▲YM%):

Adding the additional overhead will increase Fixed Costs to:

New Break-even Sales with addition of Site Supervisor:

Change in previous Break-even Sales with addition of Site Supervisor:

This analysis assumes that sales remain static. Continue adjusting the "Reduction in direct labor costs (YL%)" and "Reduction in direct materials costs (YM%)" to find the percentage reduction required to pay for new hire. When "Adjusted cost of hiring Site Supervisor" approaches $0, you've found the percentage improvement required to afford the hire. Now you have to decide if it is reasonable to expect that reduction amount.