Question

# Part 1 We’ve already done quite a bit of work on projected costs for My Assistant,...

Part 1

We’ve already done quite a bit of work on projected costs for My Assistant, so pull out your notes from Class #2. To recap, W.T.’s planning on the following:

 Newspaper ad \$120 per month Social media manager \$100 per month; \$1 per job scheduled Payment collection \$0.75 per job Gas \$4.00 per job

Considering his analysis of similar services and to keep things simple, W.T. plans to price all jobs the same and charge \$15 per job. Because of this flat rate, he anticipates he’ll likely need to create different types of “jobs”. For example, purchasing a list of items at the grocery store would be one job, while a bundle of 2-3 small errands such as picking up dry cleaning and prescriptions, might be considered one job. We’ll deal with those details later. For now, assume that all jobs are priced at \$15 each and all have the associated variable expenses listed above.

Because this will be a new business, W.T. knows business will likely be slow at the beginning. Complete the following table assuming W.T. completes 10 jobs in a single month.

 Item Per Job Total (10 jobs) Computations Sales \$           9.25 \$92.50 Less: Variable Cost \$5.75 \$57.5 Contribution Margin \$         3.5 \$35 Less: Fixed Cost \$ \$ Gross Margin \$ \$

 Item Per Job Total (10 jobs) Computations Sales \$    15.00 \$            150.00 10 x \$15 Less: Variable cost 5.75 57.50 10 x (\$1 + \$0.75 + \$4) Contribution margin 9.25 \$               92.50 \$150 - \$57.50 Less: Fixed cost 220.00 \$120 + \$100 Net income (loss) \$           -127.50 \$92.50 - \$220

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