Question

Compute fees based on the following information, both to break even and to account for the desired profit margin. (Note: you will first need to calculate the indirect costs. Total the other costs, and then calculate 25% of those costs.

ITEM COST

Room Rental $250

Audiovisual Equip $100

4 Presenters @ $500/each $2,000

60 workbooks @ $15/each $900

60 lunches @ $15/each $900

60 coffees @ $3.50/each $210

Indirect costs @25% ????

Profit Margin @5% ????

NEED THIS ASAP - THANKS IN ADVANCE.

Answer 1

Calculation of indirect costs:

A	Room Rental	250
B	Audio Visual Equip	100
C	Presenters Costs	2000
D	Workbooks	900
E	Lunches	900
F	Coffees	210
G	Total Costs other than Indirect Costs	4360
H	Indirect Costs (25% of Other Costs = 25% (4360)	1090

Fees to Breakeven:

At Breakeven point, Contribution shall equal Fixed Costs i.e., Sales shall equal the aggregate of costs.

Hence, In order to breakeven, fees shall equal total costs.

Fees at breakeven point

= Total Costs other than Indirect Costs + Indirect Costs

= $4360 + $1090

= $5450

Fees to breakeven = $5450

Fees to earn the desired profit:  

Desired Profit = 5% of $5450 = $272.50

Fees = Total Costs at Breakeven + Desired Profit

= $5450 + $272.50

= $5722.50

Fees to earn desired profit = $5722.50

Note: Desired profit percentage is taken as a percentage of the total costs.