Exercise 11.2 ( NEED HELP WITH THIS)
As the executive director of Advocates for Children, you have had a change of heart. You decide not to attempt to maximize revenues in this second seminar. You decide to exclude a profit margin in the fee computation, but you will include indirect costs. Additionally, the local United Way in the community hosting the seminar has guaranteed 45 participants. If fewer than 45 participants register for the seminar, the United Way will make up the difference. In exchange for this guarantee, the United Way has asked you to set the seminar fee as low as possible. Following the checklist in Figure 11.1, perform all the computations necessary to set a fee. What will your fee be?
FIGURE 11.1 Major Fee-Setting Issues (CHECK LIST)
1. Direct and indirect costs
2. Depreciation and use allowance
3. Unallowable costs
4. Profit margins
5. Fixed and variable costs
6. Break-even points
7. Market prices
8. Variable fee and sliding fee schedules
Discussion of basics
A. Direct costs are costs that can be directly related to producing the products and services .
B. Indirect costs are costs that are not directly related to the products or services , but are indirectly related to them.
C. Variable costs," which increase directly in proportion to the level of sales in dollars or units sold. Depending on your type of business, some examples would be cost of goods sold, sales commissions, shipping charges, delivery charges, costs of direct materials or supplies, wages of part-time or ...
This solution provides calculations for setting fees.