Question

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	$	$

Answer 1

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