Question

Semester Case - My Assistant As you know from your pre-class work, W.T. needs to determine how much he'll charge the customers of My Assistant. Keep in mind that he'll need to (1) cover costs and (2) earn a profit so he can be paid. 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: $120 per month $100 per month; $1 per job scheduled $0.75 per job $4.00 per job Newspaper ad Social media manager Payment collection Gas 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. Computations Total Per Job Item (10 jobs) 24 Sales Less: Variable Cost 24 Contribution Margin Less: Fixed Cost Gross Margin %$4

Answer 1

Item		Per Job ($)	Total (10 jobs)	Computations
Sales		15	$            150.00	$15 per job * 10 jobs
Less: Variable Cost
	Social Media Manager	1	$            (10.00)	$1 per job * 10 jobs
	Payment Collection	0.75	$               (7.50)	$0.75 per job * 10 jobs
	Gas	4	$            (40.00)	$4 per job *10 jobs
Contribution margin			$               92.50	Sales - Total Variable Cost (i.e. 150-10-7.5-40)
Less: Fixed Cost
	Newspaper add		$          (120.00)
	Social Media Manager		$          (100.00)
Gross margin			$          (127.50)	Contribution Margin - Total Fixed Cost (i.e. 92.5-120-100)