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