Question

AS YOU know from your pre-class work. We 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 proht 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: Newspaper ad Social media manager Payment collection Gas $120 per month $100 per month: $1 per job scheduled $0.75 per job $4.00 per job Considering his analysis of similar services and to keep things simple, W.1. plans to price anos 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.

Answer 1

1)

sales price per Job	15
Variable cost per Job	(5.75)    [1+.75+4)
contribution margin per job	9.25

2)

Total Fixed cost = 120+100 = 220

Breakeven point (units) =Fixed cost /contribution per Job

                                   = 220 /9.25

                                   = 23.78 (rounded to 24 Jobs)

3)Breakeven point in sales = 24 * 15 = 360

4)

Item	Per Job	Total (24 Jobs)
Sales	15	360
Variable cost	(5.75)	(138)
Contribution margin	9.25	222
Fixed cost		(220)
Gross margin		2

Breakeven point is not exactly 0 since Breakeven point in units is rounded to nearest decimal place.